In the Tuscaloosa Northern Railway Company v. Gude case of 1890, the U.S. Supreme Court ruled in favor of Gude, a landowner whose property was taken by the railway company for construction purposes without proper compensation or due process. The court held that while eminent domain allows governments and their assignees to take private property for public use, it must be accompanied by just compensation as mandated by the Fifth Amendment to the Constitution. In this case, Tuscaloosa Northern Railway Company failed to provide adequate payment before seizing Gude's land which led to an infringement on his constitutional rights. This ruling reaffirmed that corporations using delegated governmental powers are subject to constitutional limitations and safeguards protecting individual rights against arbitrary deprivation of life, liberty or property.

In the dissenting opinion for Tuscaloosa Northern Railway Company v. Gude, the justice argued that the majority's decision to uphold a lower court ruling in favor of Gude was incorrect. The dissent focused on two main points: firstly, it contended that there was insufficient evidence to prove negligence on part of the railway company; and secondly, it disagreed with how damages were calculated by arguing they were excessive and not based on actual loss suffered by Gude. The justice believed that this case should have been treated as one involving simple negligence rather than willful misconduct or gross negligence which would warrant punitive damages. Therefore, he felt that only compensatory damages directly related to proven harm should be awarded instead of punishing the railroad company financially without clear proof of their culpability beyond ordinary carelessness.