In Union Pacific Railway Company v. United States, the Supreme Court was asked to decide whether the Union Pacific Railway Company was liable for the payment of taxes on the value of the land it received from the United States government. The Union Pacific Railway Company had been granted land by the United States government in order to build a transcontinental railroad. The company argued that it should not be liable for taxes on the value of the land because it had not received any money for the land. The Supreme Court held that the Union Pacific Railway Company was liable for the payment of taxes on the value of the land it received from the United States government. The Court reasoned that the company had received a valuable benefit from the government in the form of the land, and that this benefit was subject to taxation. The Court also noted that the company had received a substantial benefit from the government in the form of subsidies and other assistance, and that these benefits should also be subject to taxation. The Court's decision in this case established that companies that receive valuable benefits from the government are liable for the payment of taxes on the value of those benefits. This decision has been cited in numerous subsequent cases involving the taxation of government benefits.

Justice Field dissented from the majority opinion in Union Pacific Railway Company v. United States, arguing that Congress had exceeded its authority under the Constitution when it passed a law granting land to railroad companies for construction of railroads. He argued that this was an unconstitutional taking of private property without just compensation and thus violated the Fifth Amendment's Takings Clause. Furthermore, he argued that Congress did not have the power to grant such lands as they were already owned by individuals or states prior to passage of this act and therefore could not be taken away without due process or payment of just compensation. Justice Field concluded his dissent by stating that if Congress wanted to promote development through grants like these then it should do so within its constitutional limits rather than overstepping them with laws like this one which violate fundamental rights protected by our Constitution.