In the case of Pennsylvania Railroad Company v. W.F. Jacoby & Company in 1916, the U.S Supreme Court ruled on a dispute involving freight charges and liability for damage to goods during transportation. The plaintiff, W.F. Jacoby & Co., had shipped goods via Pennsylvania Railroad but found them damaged upon arrival due to inadequate packing by the shipper itself rather than any negligence by the railroad company. The court held that under federal law (the Carmack Amendment), when a carrier issues a bill of lading without noting visible defects in packaging or condition of goods at origin, it cannot later claim those defects as defense against damages unless such facts were known to both parties at time of shipment's acceptance for transport.

In the dissenting opinion for Pennsylvania Railroad Company v. W.F. Jacoby & Company, Justice Holmes disagreed with the majority's interpretation of a contract between the parties involved in this case. He argued that there was no clear evidence to suggest that Pennsylvania Railroad had agreed to be held liable for any damages caused by delays in transportation unless they were due to negligence on their part. According to him, it would not make sense for a company like Pennsylvania Railroad, which has little control over certain factors such as weather conditions or mechanical failures, to agree to such terms without explicitly stating so in its contracts with customers like W.F. Jacoby & Co., who are fully aware of these risks when entering into agreements involving freight transportations services.