In the Southern Railway Company v. Allison case of 1902, the U.S Supreme Court ruled in favor of Southern Railway Company. The dispute arose when Mr. Allison sued the railway company for damages after his cotton was destroyed by a fire that started from sparks emitted by one of their locomotives. However, there was an existing agreement between them which stated that any damage caused to goods due to fire would not be compensated unless it could be proven that such damage resulted from negligence on part of the company's employees. The court held that this stipulation did not violate public policy or law and thus, upheld its validity. It further noted that while common carriers are generally liable for all losses except those resulting from acts of God or public enemies, they can limit their liability through special contracts as long as these do not exempt them entirely from negligence or fraud. Therefore, since Mr. Allison failed to prove negligence on part of Southern Railway’s employees causing the fire and subsequent loss; he could not claim compensation under their contract terms.

In the dissenting opinion for Southern Railway Company v. Allison, it was argued that the majority's decision to uphold a damages award against the railway company was incorrect. The dissenting justices believed that there were significant issues with how the jury had been instructed in this case, which could have led them to make an improper determination of liability. They felt that these instructions may have allowed for bias or prejudice against corporations like Southern Railway Company and did not properly guide jurors on how they should consider evidence related to negligence and causation in personal injury cases involving railroads. Furthermore, they disagreed with the majority's interpretation of certain legal principles related to corporate liability and fault standards under common law rules governing railroad operations at that time.