In the 1891 case of Nesbit v. Riverside Independent District, the U.S Supreme Court addressed a dispute over land ownership in Iowa. The plaintiff, Nesbit, claimed that he had purchased certain lands from an individual who had received them as part of a congressional grant to aid railroad construction in Iowa. However, these lands were located within boundaries set for public schools by state law and were thus claimed by the defendant school district. The court ruled against Nesbit on grounds that when Congress made its grant to support railroads it did not intend to include sections reserved for schools under state laws; therefore those sections remained with states despite any subsequent sales or transfers. This ruling upheld the principle that federal grants should be interpreted strictly and any ambiguities resolved in favor of intended beneficiaries - here being public education.

The dissenting opinion in the NESBIT v. RIVERSIDE INDEPENDENT DISTRICT case argued that the majority's decision to uphold a tax levy for school purposes was incorrect, as it violated constitutional provisions regarding taxation and public debt. The dissent contended that this interpretation of the law would allow local governments to impose taxes without limit, leading to potential abuse and financial hardship for taxpayers. They also disagreed with the majority's view on what constituted 'public purpose', arguing that not all activities carried out by government entities should be considered as such, especially when they involve significant expenditure or indebtedness. Furthermore, they believed there were other ways schools could be funded without resorting to potentially unconstitutional means.