In Propeller Company v. United States, the Supreme Court was asked to decide whether the United States was liable for damages caused by a government-owned vessel that collided with a propeller owned by the Propeller Company. The Propeller Company argued that the government was liable for the damages because the government vessel was negligent in its operation. The United States argued that it was not liable because the vessel was a government-owned vessel and was therefore immune from liability. The Supreme Court held that the United States was liable for the damages caused by the government vessel. The Court reasoned that the government vessel was not immune from liability because it was operated in a negligent manner. The Court also noted that the government vessel was not engaged in a governmental function, and therefore the government was not immune from liability. The Court concluded that the government was liable for the damages caused by the government vessel and ordered the United States to pay the Propeller Company for the damages.

Justice Field delivered the dissenting opinion in Propeller Company v. United States, arguing that the majority's decision was wrongfully decided and should be reversed. He argued that Congress had no authority to pass a law which would interfere with contracts between private parties as it did in this case. The contract at issue provided for compensation of $1,000 per month for use of a steamboat owned by Propeller Company while employed by the government during wartime service; however, Congress passed an act reducing such payments to $500 per month after-the-fact. Justice Field reasoned that if Congress could reduce these payments retroactively then they could also increase them retroactively and thus have unlimited power over all existing contracts regardless of their terms or conditions agreed upon by both parties prior to passage of any legislation - something he believed was unconstitutional and beyond Congressional authority under Article I Section 10 Clause 1 (the Contract Clause). Therefore, Justice Field concluded that since there was nothing illegal about the original agreement between Propeller Company and the United States Government before passage of this Act, it should not be allowed to stand as valid law due its interference with pre-existing contractual obligations entered into freely without duress or fraud on either party's part.