In the case of Missouri Pacific Railroad Company v. Stroud, the U.S Supreme Court ruled in favor of the railroad company. The dispute arose when Stroud sued for damages after his land was flooded due to a change in water flow caused by construction work done by the railroad company on its right-of-way through his property. The lower court awarded him compensation but this decision was reversed by the Supreme Court which held that as long as railroads use their easement for railway purposes and not maliciously or negligently, they are within their rights even if it results in damage to adjacent properties. This ruling established an important precedent regarding property rights and responsibilities related to easements.

In the dissenting opinion for Missouri Pacific Railroad Company v. Stroud, Justice Holmes argued that the majority's decision was based on a misinterpretation of the law and an overreach of judicial power. He contended that it is not within the Court's jurisdiction to decide whether or not a state statute should be applied retroactively; such decisions are solely in the purview of state courts. Furthermore, he disagreed with their interpretation of Arkansas' Workmen’s Compensation Act as being applicable only prospectively and not retrospectively. According to him, there was no clear indication from either its language or legislative history suggesting this limitation on its applicability. Therefore, he believed that Stroud should have been allowed his claim under this act even though his injury occurred before it came into effect.