In the Northern Pacific Railroad Company v. Sanders case of 1896, the U.S Supreme Court ruled in favor of the railroad company. The dispute arose when Sanders claimed that he had a right to a piece of land through preemption rights under federal law, which allows individuals who live on and improve public lands to purchase them from the government after certain conditions are met. However, this land was part of those granted by Congress to Northern Pacific Railroad Company for constructing railway lines. The court held that once these lands were granted by Congress for rail construction purposes, they ceased being public lands and thus could not be preempted under federal laws before patent issuance or certification selection approval by Land Department officials. Therefore, even though Sanders occupied and improved it first before such approval was given or patent issued, his claim was invalid as per existing legislation at that time.

In the dissenting opinion for Northern Pacific Railroad Company v. Sanders, 1896, it was argued that the majority's decision to uphold a lower court ruling in favor of Sanders failed to properly interpret and apply existing laws related to land grants given by Congress. The dissenting justices believed that when Congress granted lands to railroad companies for construction purposes, they did not intend these lands be used indefinitely without any obligation towards settlers who had made improvements on them. They contended that such an interpretation would result in unjust enrichment of the railroads at the expense of individual citizens who had relied on government assurances regarding their rights over these lands. Therefore, they disagreed with the majority's view which allowed Northern Pacific Railroad Company to evict Sanders from his property despite him having lived there and improved it over many years.