In the case of Merritt & Chapman Derrick & Wrecking Company v. United States (1926), the U.S Supreme Court ruled in favor of the United States, upholding a decision by lower courts that denied compensation to Merritt & Chapman for services rendered during World War I. The company had been contracted by the government to salvage sunken vessels and other maritime property; however, due to wartime necessity, some of these tasks were performed without explicit contracts or agreements on payment terms. After the war ended, Merritt & Chapman sought compensation for their work but was denied by lower courts on grounds that no formal contract existed for those specific services. On appeal, they argued this denial violated principles of equity and justice as they had acted in good faith under emergency circumstances at request from high-ranking officials who lacked authority to bind government legally but whose orders were nonetheless obeyed out of patriotic duty. However, Supreme Court affirmed previous rulings stating while such actions are commendable and praiseworthy during emergencies like war times; it does not create legal obligation upon government unless there is an express or implied promise made by someone with proper authority.

In the dissenting opinion for Merritt & Chapman Derrick & Wrecking Company v. United States, Justice Oliver Wendell Holmes disagreed with the majority's ruling that a private contractor could be held liable for damages caused during a salvage operation authorized by the U.S. government. He argued that if an entity is acting under direct orders from the government and causing no unnecessary harm, it should not bear responsibility for any damage resulting from those actions. According to him, such liability would discourage entities from assisting in public works or emergency situations out of fear of potential lawsuits. Furthermore, he contended that this decision contradicted previous rulings where contractors were protected when performing work at the direction of federal authorities.