In the case of Gusman v. Marrero (1900), the United States Supreme Court addressed a dispute over property rights in New Orleans, Louisiana. The plaintiff, Gusman, claimed that he had purchased land from Marrero and paid for it in full but was not given possession due to an alleged mortgage lien on the property held by a third party. The lower court ruled in favor of Marrero stating that there was indeed a valid mortgage lien on the property at issue which prevented him from transferring ownership to Gusman. However, upon appeal to the U.S Supreme Court, this decision was reversed with Justice Peckham delivering opinion of court. It found that under Louisiana law at that time period no such encumbrance existed as mortgages were required to be recorded within specific timeframe or they would become null and void against third parties without notice; thus making them unenforceable against subsequent purchasers like Gusman who bought without knowledge of any existing liens.

The dissenting opinion in the Gusman v. Marrero case argued that the majority's decision was inconsistent with previous rulings of the court and violated principles of equity. The dissent believed that a mortgage, once recorded, should be considered as notice to all subsequent purchasers or encumbrancers regardless of whether they had actual knowledge of it or not. They contended that this principle is fundamental to property law and necessary for maintaining stability in real estate transactions. Furthermore, they disagreed with the majority's interpretation of Louisiana law on which their ruling relied heavily upon. According to them, under Louisiana law too, recording a mortgage gives constructive notice to all future buyers about its existence even if there is no actual awareness about it.