In Labette County Commissioners & Others v. United States Ex Rel. Moulton, the Supreme Court of the United States was asked to decide whether the United States had the right to sue a county in Kansas for the recovery of money paid out by the county in the form of bonds. The case arose when the county issued bonds to finance the construction of a bridge. The bonds were issued without the approval of the United States, and the United States sought to recover the money paid out by the county. The Supreme Court held that the United States had the right to sue the county for the recovery of the money paid out by the county. The Court reasoned that the United States had the right to protect its interests in the matter, and that the county had no right to issue the bonds without the approval of the United States. The Court also held that the United States had the right to sue the county for the recovery of the money paid out by the county, even though the county had acted in good faith in issuing the bonds. The Court's decision in this case established that the United States has the right to sue a county for the recovery of money paid out by the county in the form of bonds, even if the county acted in good faith in issuing the bonds. This decision has been cited in numerous subsequent cases involving the rights of the United States to sue a county for the recovery of money paid out by the county.

In Labette County Commissioners & Others v. United States Ex Rel. Moulton, the Supreme Court was asked to decide whether a county could be held liable for failing to pay money owed under an act of Congress that granted land in lieu of military bounty warrants issued during the Civil War. The majority opinion found that counties were not liable because they had no legal authority or obligation to make such payments and thus could not be sued by individuals claiming rights under federal law. However, Justice Field dissented from this ruling and argued that counties should indeed be held responsible for their failure to comply with acts of Congress since it is within their power as local governments to do so. He further noted that if states are allowed immunity from suit then there would effectively be no remedy available when citizens seek redress against state-level entities who violate federal laws; therefore, he concluded, allowing suits against counties was necessary in order for justice to prevail in these cases.