In the case of Lake Street Elevated Railroad Company v. Farmers' Loan and Trust Company in 1900, the U.S Supreme Court ruled on a dispute involving bondholders and shareholders of a railroad company. The Lake Street Elevated Railroad Company had issued bonds which were secured by mortgages on its property. However, when it defaulted on these bonds, the Farmers' Loan and Trust Company sued to foreclose on the mortgage. Meanwhile, stockholders argued that they should be paid before bondholders because their investments represented ownership in the company while bonds were merely loans to be repaid later. The court disagreed with this argument stating that although stock represents an equity interest or ownership stake in a corporation; if there is any remaining value after paying off creditors (including bondholders), then it belongs to shareholders but not until all debts are satisfied first. Therefore, according to bankruptcy laws at that time - debt holders have priority over equity holders during liquidation process. This ruling reinforced legal principles regarding creditor rights and corporate finance: namely that lenders have superior claims over owners when corporations fail financially.

The dissenting opinion in the case of Lake Street Elevated Railroad Company v. Farmers' Loan and Trust Company argued that the majority's decision was a departure from established legal principles regarding corporate property rights. The dissent contended that, under Illinois law, a corporation could not be deprived of its property without due process and just compensation. It further asserted that the majority had failed to adequately consider whether or not there had been an impairment of contract by allowing for changes in rates without proper consideration for existing contracts between corporations and their shareholders. The dissent also expressed concern about potential negative impacts on future business investments if corporations were unable to rely on contractual agreements being upheld by courts.