In the case of Tonawanda v. Lyon in 1900, the Supreme Court ruled on a dispute involving land rights between the Tonawanda Band of Seneca Indians and an individual named John Lyon. The tribe claimed that they had never legally sold their lands to Ogden and Fellows, who later transferred it to Lyon. They argued that any sale was invalid because it did not comply with federal law requiring approval from Congress for such transactions involving Indian lands. The court agreed with this argument, stating that while there may have been some form of agreement or understanding between parties involved at different stages, without Congressional approval these agreements were void under Federal Law - Nonintercourse Act (1793). Therefore, ownership remained with the tribe as no legal transaction had taken place.

The dissenting opinion in the case of Tonawanda v. Lyon argued that the court majority had erred in its interpretation and application of New York state law regarding taxation. The dissent contended that under existing laws, lands owned by Native American tribes were not subject to taxation unless explicitly stated by a treaty or statute. In this particular case, there was no such provision for taxing tribal lands held in common by members of the tribe. Therefore, imposing taxes on these lands constituted an infringement upon tribal sovereignty and rights as recognized both federally and at state level. Furthermore, it was pointed out that previous rulings had upheld this principle against attempts to tax Indian-owned land without explicit legal authority to do so.