The U.S. Supreme Court case Matson Navigation Co. v. United States in 1931 revolved around the issue of whether or not a ship owned by an American corporation, but built abroad and never documented under the laws of the United States, could be considered as "American-built" for purposes of coastwise trade privileges under Section 27 of the Merchant Marine Act (Jones Act) of 1920. The plaintiff, Matson Navigation Company, argued that their vessel should be classified as such despite being constructed overseas because they were an American company and had paid all necessary duties upon importation into America. However, the government contended that only ships physically built within U.S borders could enjoy these benefits according to Jones Act stipulations. The Supreme Court ruled in favor of the government's interpretation stating that Congress intended to protect domestic shipbuilding industry through this act; hence it would contradict its purpose if foreign-built vessels owned by Americans were granted same privileges without contributing towards domestic shipbuilding efforts.

In the dissenting opinion for Matson Navigation Co. v. United States, Justice Stone argued that the majority's decision to deny Matson a tax refund was incorrect because it misinterpreted the Revenue Act of 1918. He contended that under this act, losses incurred due to damage or destruction of property could be deducted from gross income in order to calculate net income for taxation purposes. In his view, since Matson had suffered significant losses when its ships were requisitioned and damaged during World War I by the U.S government, these should have been deductible expenses which would reduce their taxable income and thus entitle them to a tax refund. The majority’s interpretation not only contradicted common understanding but also failed to consider Congress' intent behind enacting such provisions - providing relief for businesses suffering wartime damages.