In The Sir William Peel, the Supreme Court of the United States held that a vessel which had been sold in good faith and without knowledge of any defect or lien was not liable to be arrested for debts due by her former owners. The case arose when creditors sought to arrest a British steamer named “The Sir William Peel” on account of unpaid bills owed by its prior owner. However, since the ship had already been sold at auction with no knowledge of any existing debt or lien against it, the court found that such an action would be unjust and therefore denied the creditor's request. This decision established important precedent regarding maritime law and clarified how vessels may be treated under certain circumstances.

In The Sir William Peel case, the Supreme Court was asked to decide whether a shipowner could be held liable for damages caused by an unseaworthy vessel. The majority opinion found that the owner of a vessel is not responsible for any damage resulting from its unseaworthiness unless it can be proven that they were aware of the condition and failed to take reasonable steps to remedy it. However, in his dissenting opinion Justice Field argued that this ruling would place too much burden on injured parties seeking compensation as proving knowledge or negligence on behalf of the owner would often require expensive litigation which many victims may not have access to. He proposed instead that owners should always bear responsibility for their vessels' seaworthiness regardless of whether they had prior knowledge or took action against it; otherwise innocent people who suffer injury due to an unseaworthy vessel will go uncompensated.