In the 1939 case of Postal Steamship Corp. v. El Esleo, the United States Supreme Court ruled in favor of Postal Steamship Corporation, reversing a decision by lower courts that had favored El Esleo. The dispute arose when a ship owned by El Esleo was damaged after colliding with another vessel operated by Postal Steamship Corporation near New York Harbor's entrance during foggy conditions. Both parties were found to be at fault for not adhering to navigation rules designed for such weather conditions; however, the court held that damages should be divided equally between them as per maritime law principles applicable in cases where both vessels are at fault (the "divided damages rule"). This ruling clarified and reinforced this principle within U.S maritime law.

In the dissenting opinion for Postal Steamship Corp. v. El Esleo, Justice Black disagreed with the majority's ruling that a ship owner could limit its liability to an amount less than the value of the cargo lost due to negligence. He argued that this decision undermined public policy and contradicted previous court rulings which held that such limitations were invalid unless explicitly agreed upon by both parties involved in shipping contracts. Furthermore, he contended that allowing ship owners to unilaterally decide their own liability limits would lead to unfair practices and exploitation of shippers who often have no other choice but agree on these terms due to lack of alternatives or bargaining power.