In the Merritt v. Bowdoin College case of 1897, the U.S Supreme Court ruled in favor of Bowdoin College. The dispute arose when a certain Mr. Merritt claimed ownership over land that was previously donated to Bowdoin College by James Bowdoin III, who had received it from his father, Governor James Bowdoin II. The college argued that they were rightful owners as per the will and testament left by their benefactor while Mr. Merritt contended he had purchased it from other parties unaware of any prior claims on it. The court held that even though there might have been some irregularities in how the property was transferred to the college after James's death, those did not invalidate its claim since no fraud or bad faith could be proven against them; moreover, too much time (over half a century) had passed for such issues to be brought up now. This decision reinforced two legal principles: firstly, courts are reluctant to disturb long-standing possession unless clear evidence of wrongdoing is presented; secondly, potential buyers must exercise due diligence before purchasing property - ignorance about existing claims does not exempt one from respecting them.

In the dissenting opinion for Merritt v. Bowdoin College, it was argued that the college should not be exempt from paying taxes on its property in Washington D.C., as it did not fall under any of the categories specified by Congress for tax exemption. The justice believed that while educational institutions serve a public purpose and are beneficial to society, they do not necessarily qualify as "public charities" unless explicitly stated by legislation. He also pointed out that if all properties used for educational purposes were exempted from taxation, then every private school or college would enjoy this privilege which could lead to significant loss of revenue for local governments. Furthermore, he emphasized that exemptions should be strictly construed and only granted when clearly within the power of authority granting them.