In the case of Sacramento Navigation Company v. Salz (1926), the Supreme Court ruled in favor of Salz, upholding a lower court's decision that he was entitled to damages after his property was flooded due to negligence by the Sacramento Navigation Company. The company had constructed a dam across an arm of the Sacramento River which caused water levels to rise and flood Salz’s land. The company argued that they were not liable for damages as their actions were authorized under an Act of Congress, but this argument was rejected by both courts. They found that while Congress did authorize improvements on navigable waters, it did not grant immunity from liability for any resulting damage caused by negligent construction or operation.

In the dissenting opinion for Sacramento Navigation Company v. Salz, the justice argued that the majority's decision was inconsistent with previous rulings and principles of maritime law. The dissent focused on two main points: first, that a ship owner is not liable for damages caused by an independent contractor unless it can be proven that they were negligent in hiring or supervising them; second, that even if negligence could be established, liability should still not extend to consequential damages such as lost profits. In this case, there was no evidence presented to suggest any negligence on part of the ship owner in selecting or overseeing their contractors. Furthermore, allowing recovery for lost profits would open up a Pandora’s box of potential claims and create uncertainty within maritime commerce – something which goes against fundamental tenets of commercial law designed to provide predictability and stability.