In the 1908 case of New York Central and Hudson River Railroad Company v. United States, the U.S. Supreme Court ruled that a corporation could be held criminally liable for acts committed by its agents or employees within their scope of employment, even if those actions were directly against company policy or orders. The decision was based on an incident where two railroad companies gave prohibited rebates to sugar refineries in violation of the Elkins Act - a federal law prohibiting transportation companies from giving discounts to selected customers. Although neither company's board had approved these illegal kickbacks, they were found guilty because it was determined that their managers knew about and facilitated these transactions. This ruling established the principle of corporate criminal liability in U.S law.

In the dissenting opinion for New York Central and Hudson River Railroad Company v. United States, Justice Moody argued that corporations should not be held criminally liable for the actions of their employees unless it can be proven that those in control of the corporation authorized or approved such actions. He contended that a corporation, being an artificial entity, cannot commit a crime or harbor criminal intent; only its agents can do so. Therefore, to hold a corporation responsible for every act committed by its numerous employees would lead to unjust outcomes and exceed reasonable limits on corporate liability. Furthermore, he noted this could potentially discourage businesses from undertaking certain activities due to fear of legal repercussions based on employee misconduct beyond their control or knowledge.