In the 1903 case of James v. Appel, the United States Supreme Court ruled on a dispute regarding land ownership in Texas. The plaintiff, James, claimed that he had purchased the land from its original owner and therefore held rightful title to it. However, Appel argued that he was entitled to the property because he had been occupying it for an extended period under color of title - meaning with a claim based on a written document such as a deed or will which appeared valid but was not legally effective due to some defect. The court found in favor of Appel by applying Texas's law on adverse possession (the legal principle allowing someone who possesses another person's property for an extended time without challenge to eventually become its lawful owner). It concluded that since Appel occupied and used the disputed land openly and continuously for more than five years while paying taxes on it during this time frame, his claim superseded any previous claims made by others including those asserted by James.

In the dissenting opinion for James v. Appel, Justice Harlan argued that the majority's decision was inconsistent with previous rulings of the Court and violated principles of equity. He contended that a mortgagee who has taken possession should be considered a trustee for both himself and the mortgagor, holding any surplus from rents or profits in trust for the latter after satisfying his own claim. The majority's ruling allowed Mr. Appel to keep all profits derived from property he held as security on a loan while it was in his possession, even though these exceeded what he was owed under terms of mortgage agreement by nearly $10,000 (a significant sum at time). Justice Harlan believed this constituted unjust enrichment at expense of Mrs. James (the mortgagor) and her children - beneficiaries under her late husband’s will - contrary to established legal principles governing such situations.