In the case of Magruder v. Drury and Maddox, Trustee (1914), the U.S. Supreme Court dealt with a dispute over land ownership in Washington D.C., specifically regarding whether or not certain lands were exempt from taxation under an 1870 Act of Congress. The court ruled that these lands were indeed tax-exempt due to their use for charitable purposes by Howard University and Freedmen's Hospital, both institutions serving African Americans post-Civil War era. The decision was based on a clause in the act which stated that property used for educational or charitable purposes would be free from taxation as long as it remained dedicated to those uses.

In the dissenting opinion for Magruder v. Drury and Maddox, Trustee, 1914, Justice Holmes argued that the majority's decision was incorrect because it failed to consider a crucial aspect of property law. He contended that when an individual purchases a piece of land with an existing mortgage on it, they are not obligated to pay off this debt unless they have explicitly agreed to do so in writing. The majority's ruling held otherwise - stating that the purchaser is automatically responsible for any outstanding mortgages upon buying the property. Holmes believed this interpretation contradicted established principles of contract law and unfairly burdened purchasers who may be unaware of these debts at the time of purchase.