In the case of Pearce v. Rice in 1891, the United States Supreme Court dealt with a dispute over land ownership. The plaintiff, Pearce, claimed that he had purchased a tract of land from an individual who had received it as part of a military bounty land warrant under an act passed by Congress in 1855. However, this individual was not actually entitled to receive such warrants because they were only for soldiers or their widows and children; this person was merely acting as an agent for others who were eligible. The defendant, Rice, argued that since the original grantee did not have valid title to the property due to his ineligible status under federal law at that time when he sold it to Pearce, therefore Pearce's claim should be nullified too. The court ruled in favor of Rice stating that although there might have been some irregularities regarding how these lands were initially distributed but once they are out into commerce and bought by innocent purchasers without any notice about those irregularities then their titles cannot be invalidated afterwards based on those initial discrepancies alone unless fraud can be proven which wasn't established here against either party involved.

The dissenting opinion in the Pearce v. Rice case argued that the court majority had erred in its interpretation of the law and constitutionality regarding taxation on bonds. The dissent emphasized that a state has no right to tax federal securities, as this would interfere with federal operations and violate constitutional principles of intergovernmental immunity. It was also pointed out that such taxes could potentially be used by states to obstruct or control actions of the national government, which is against the spirit of cooperative federalism enshrined in U.S Constitution. Furthermore, it was contended that exempting these bonds from state taxation does not necessarily mean granting them special privileges; rather it's about maintaining clear boundaries between state and federal jurisdictions as intended by framers of Constitution.