In the case of Stripe et al., Receivers, v. United States (1925), the U.S Supreme Court was tasked with determining whether a railroad company could be held liable for damages caused by a fire that started from sparks emitted by one of its locomotives. The court ruled in favor of the government, stating that under federal common law, railroads are responsible for fires caused by their operations unless they can prove they took all possible precautions to prevent such an event. This ruling established strict liability for railroads in cases involving fire damage and set a precedent requiring companies to take preventative measures against potential harm resulting from their activities.

In the dissenting opinion for STRIPE et al., RECEIVERS, v. UNITED STATES, Justice McReynolds disagreed with the majority's decision to uphold a lower court ruling that allowed receivers of insolvent railroads to pay employees' wages before paying off secured creditors. He argued that this violated established principles of equity and property rights by prioritizing unsecured claims over secured ones without any statutory authority or precedent justifying such an exception. Furthermore, he contended that it was unfair for these wage earners - who had voluntarily assumed risk by working for financially unstable companies - to be compensated at the expense of bondholders who had lent money based on legal assurances their investments would be protected in case of insolvency. Thus, he believed this ruling undermined confidence in credit markets and could potentially discourage future investment.