In the 1920 case of Panama Railroad Company v. Pigott, a minor represented by his guardian ad litem Morrell, the U.S Supreme Court was tasked with determining whether or not an accident that occurred on one of Panama Railroad's steamships could be tried in a United States court. The plaintiff, Pigott, had been injured while onboard and sought damages from the company. However, since both parties were citizens of New York but the incident happened outside U.S jurisdiction (in Panamanian waters), it raised questions about legal jurisdiction and maritime law application. The railroad company argued that as per international law principles, they should be immune from such suits in American courts because their operations were conducted under authority granted by another sovereign nation - Panama. On appeal to the Supreme Court though, this argument was rejected. The court ruled that despite being chartered overseas (Panama), since both litigants were domiciled within New York State at time of suit filing; hence federal courts did have subject-matter jurisdiction over this dispute arising out-of-state/overseas due to diversity citizenship clause present within Judiciary Act provisions for civil cases involving foreign elements.

In the dissenting opinion for Panama Railroad Company v. Pigott, it was argued that the court majority erred in its interpretation of liability and negligence laws. The dissenting justices believed that the plaintiff should bear some responsibility for his injuries due to contributory negligence. They contended that even though a minor, he had sufficient understanding to appreciate danger and avoid injury by not boarding a moving train without permission or supervision. Furthermore, they disagreed with applying U.S law on foreign soil where local customs may differ significantly from American norms regarding safety practices and expectations of care owed by companies like railroads towards passengers or trespassers alike. Thus, they felt this ruling could set an unwarranted precedent for future cases involving accidents abroad involving American entities.