In the case of Hagan v. Scottish Insurance Company in 1901, the U.S Supreme Court was tasked with determining whether an insurance company could be held liable for damages caused by a fire that spread from a neighboring property. The plaintiff, Hagan, had his property insured by the defendant and sought compensation after it was destroyed in a fire that originated on adjacent premises. The insurance policy explicitly stated it did not cover losses resulting from fires originating outside of the insured's premises. However, Hagan argued this clause violated public policy as it allowed insurers to evade responsibility for damage caused indirectly by external sources. The court ruled in favor of Scottish Insurance Company stating there was no violation of public policy since such clauses are common practice within insurance contracts and serve to limit insurer liability to risks they can reasonably assess and price into premiums. Therefore, while unfortunate for Mr.Hagan who suffered significant loss due to circumstances beyond his control; under contract law principles he agreed upon entering into an agreement with Scottish Insurance Co., they were not obligated to compensate him.

In the dissenting opinion for Hagan v. Scottish Insurance Company, it was argued that the majority's decision to uphold a lower court ruling in favor of the insurance company was incorrect. The dissenting justices believed that there were significant issues with how evidence had been presented and interpreted during trial proceedings. They contended that certain pieces of evidence should have been admitted into consideration but were not, which they felt could have potentially altered the outcome of the case significantly. Furthermore, they disagreed with how some testimonies were evaluated by both jury and judge alike; arguing these evaluations lacked proper scrutiny or discernment as required by law. In their view, this resulted in an unfair advantage for one party over another - specifically favoring Scottish Insurance Company at Hagan’s expense – thus leading to what they deemed an unjust verdict.