The Supreme Court case of Liverpool and Great Western Steam Company v. Insurance Company of North America was a dispute between the two companies over a contract for insurance coverage. The Liverpool and Great Western Steam Company (LGW) had purchased a policy from the Insurance Company of North America (INA) to cover losses from a fire that occurred at one of their warehouses. LGW argued that the policy should cover the losses, while INA argued that the policy did not cover the losses because the fire was caused by an employee of LGW. The Supreme Court ruled in favor of LGW, finding that the policy did cover the losses. The Court held that the policy was clear and unambiguous, and that the language of the policy did not exclude losses caused by employees of the insured. The Court also held that the policy was not ambiguous and that the language of the policy should be interpreted in favor of the insured. The Court's decision was significant because it established that insurance policies should be interpreted in favor of the insured, and that the language of the policy should be clear and unambiguous. This decision has been cited in numerous cases since then, and has become an important precedent in insurance law.

In the dissenting opinion of Liverpool and Great Western Steam Company v. Insurance Company of North America, Justice Harlan argued that the majority’s decision was incorrect because it failed to consider a key element in determining whether or not an insurance policy had been breached. Specifically, he argued that when assessing whether or not there had been a breach of contract, courts should look at both parties’ intentions as well as their actions. In this case, he believed that the court should have considered what each party intended to do when they entered into the agreement rather than just looking at their actual behavior. He also noted that while one party may have acted negligently in failing to fulfill its obligations under an insurance policy, if both parties were aware of such negligence but still agreed to enter into a contract then neither could be held liable for any damages resulting from it. Ultimately, Justice Harlan concluded by arguing that since there was no evidence presented which showed either party intended anything other than what they actually did – entering into an agreement with knowledge and acceptance of potential risks – then neither side could be found liable for any losses incurred due to those risks materializing.