In the case of Swan v. The Union Insurance Company of Maryland, a ship captain named John Swan sued an insurance company for failing to pay him after his vessel was damaged in a storm. He argued that he had taken out an insurance policy with the company and paid all premiums due, but they refused to reimburse him for his losses. The Supreme Court ruled in favor of Captain Swan, finding that the contract between them was valid and enforceable under maritime law. They held that since there had been no breach or violation on either side's part, it would be unjust not to award damages as promised by the policy terms. This ruling established important precedent regarding contracts made at sea and their enforcement through legal action if necessary.

Justice Story delivered the dissenting opinion in Swan v. The Union Insurance Company of Maryland, arguing that the Court should have found for the plaintiff on their claim against a fire insurance policy. He argued that it was clear from both parties' testimony and evidence presented at trial that there had been no fraud or misrepresentation by either party when they entered into the contract, and thus any ambiguity in language should be interpreted to favor coverage under the policy. Furthermore, he noted that while some of the terms used were vague and open to interpretation, this did not mean they could be disregarded altogether; rather, an effort must still be made to ascertain what each term meant within its context so as to give effect to all parts of a contract if possible. In conclusion Justice Story believed it would have been more equitable for both parties if judgment had gone in favor of Swan since he clearly acted with good faith throughout his dealings with Union Insurance Company