In the case of Pettit v. Walshe, 1903, the US Supreme Court dealt with a dispute over land ownership in California. The plaintiff, Pettit, claimed that he had purchased a parcel of land from an individual who had obtained it through preemption rights under federal law. However, before this person could receive official title to the property from the government, they sold it to Pettit. Meanwhile another party named Walshe also laid claim to this same piece of land based on his own preemption filing and was granted official title by the government because he filed first according to records at local Land Office. The court ruled in favor of Walshe stating that until an individual has received final certificate or patent for their claim from U.S Government (which is proof that all conditions required by Pre-Emption Act have been satisfied), they do not possess right or interest which can be conveyed legally to others; thus making sale between original preemptor and Pettit invalid as per Federal Law. This decision established precedent regarding transferability of claims made under Pre-Emption Act prior receiving final certification/patent from Government.

In the dissenting opinion for Pettit v. Walshe, it was argued that the majority's decision to uphold a lower court ruling - which held that a creditor could not collect on a debt because of an error in recording property ownership - undermined established legal principles and practices. The dissenting justices contended that the law should protect those who act in good faith and without knowledge of any irregularities or errors. They believed this case involved such an individual: A creditor who had loaned money based on what appeared to be valid collateral (property). When it turned out there were issues with how ownership of this property was recorded, they felt it unjust to penalize the innocent party – namely, the creditor trying to collect his due. In their view, upholding such rulings would discourage lending and disrupt economic activity by introducing unnecessary risk into transactions involving secured debts.