The Malcolm Baxter, Jr. case in 1927 revolved around a dispute over the collision of two ships - The Malcolm Baxter, Jr., and The Dorothy Wintermote - near San Francisco Bay. Both vessels were found to be at fault for not following navigational rules that could have prevented the accident. However, there was disagreement about how much each ship should pay in damages due to their respective faults. Initially, it was ruled that both parties would share equally in damage costs despite one vessel being less damaged than the other. Upon reaching the Supreme Court though, this decision was reversed based on an old maritime rule known as "the divided damages rule". According to this principle if both ships are deemed responsible for a collision they must split repair costs evenly regardless of actual damage sustained by either party. Thus even though The Dorothy Wintermote suffered more extensive harm compared with The Malcolm Baxter Jr., under this ruling they still had to share equal responsibility for all financial losses resulting from their mutual negligence.

The dissenting opinion in the case of The Malcolm Baxter, Jr. argued that the majority's decision to hold a tugboat liable for damages caused by its tow was incorrect. They believed that there should be no presumption of fault on behalf of the tugboat when an accident occurs while it is towing another vessel unless negligence can be proven. In this particular case, they felt there was insufficient evidence to prove such negligence and therefore disagreed with holding the tugboat responsible for damages incurred during its towage operation. This perspective emphasized strict adherence to principles of liability and burden of proof, arguing against any automatic assumption or shifting responsibility without clear demonstration of negligent behavior.