In Insurance Company v. Foley, the Supreme Court of the United States was asked to decide whether an insurance company was liable for a loss caused by a fire that occurred on the insured's property. The insured had purchased a policy from the insurance company that provided coverage for losses caused by fire. The insured argued that the fire was caused by the negligence of the insurance company's agent, and thus the insurance company should be liable for the loss. The Supreme Court held that the insurance company was not liable for the loss. The Court reasoned that the insurance company had no control over the actions of its agent, and thus could not be held liable for the agent's negligence. The Court further held that the insurance company had no duty to investigate the cause of the fire, and thus could not be held liable for failing to do so. The Court concluded that the insurance company was not liable for the loss, and thus the insured was not entitled to recover damages from the insurance company. This decision established that an insurance company is not liable for losses caused by the negligence of its agents, and that the insurance company has no duty to investigate the cause of a fire.

Justice Field delivered the dissenting opinion in Insurance Company v. Foley, arguing that the Court should have affirmed the decision of the Circuit Court. He argued that under California law, a contract was formed when an offer to insure property was accepted by payment of premium and delivery of policy. In this case, he argued that there had been such a contract between Foley and Insurance Company as evidenced by their agreement on terms for insurance coverage and Foley's payment of premiums over several years. Furthermore, Justice Field noted that even if no formal contract existed due to lack of consideration or other legal impediment at common law, it would still be binding under California statute which provided for contracts made without consideration where one party has received some benefit from another party’s performance or forbearance in reliance upon their promise being fulfilled. As such, Justice Field concluded that since there had been sufficient evidence presented before both courts below showing a valid contractual relationship between parties with regard to insurance coverage on certain properties owned by Foley; therefore it should not have been overturned on appeal but rather upheld as originally decided by lower court judges who were more familiar with local laws applicable in this case than members sitting on Supreme Court bench could ever hope to be.