In the 1898 case of San Diego Land and Town Company v. National City, the United States Supreme Court ruled on a dispute over land ownership in California. The San Diego Land and Town Company claimed that they owned certain lands based on two Mexican land grants which were confirmed by an act of Congress in 1851. However, National City argued that it had acquired title to these lands through various purchases from individuals who had received them as part of public domain distributions after California became a state in 1850. The court held that when California was admitted into the Union, all unappropriated or vacant lands within its limits passed into the ownership of the United States for disposition under its laws unless rights to such lands had vested previously under Mexico's rule. Therefore, since there was no evidence showing any specific grant made by Mexico before cession to these particular parcels disputed here nor their exclusion from public domain distribution afterwards due to prior vested rights recognized by U.S., National City’s claim prevailed over San Diego Land and Town Company’s assertion.

In the dissenting opinion for San Diego Land and Town Company v. National City, Justice Harlan disagreed with the majority's ruling that a city could not be held liable for damages caused by changes in a natural watercourse due to public improvements. He argued that if a municipality alters a stream's course causing damage to private property, it should be responsible for compensation under eminent domain laws. Harlan contended that such actions constituted an indirect appropriation of private property for public use without just compensation, violating constitutional rights of citizens. He also criticized the court’s reliance on English common law precedents which he believed were irrelevant given differences between American and British legal systems regarding municipal corporations’ powers and responsibilities towards their citizens' properties.