In the United States v. Atlantic Mutual Insurance Co., 1935, the U.S. Supreme Court was tasked with determining whether or not a ship owner could limit their liability for damages caused by negligence of its captain under federal maritime law. The case arose after a collision between two ships in New York Harbor, one owned by Atlantic Mutual Insurance Company and another owned by the United States government. The insurance company sought to limit its liability based on an existing statute that allowed ship owners to do so if they could prove they had no knowledge of any negligence leading to damage. However, the court ruled against them stating that this limitation did not apply when it came to cases involving personal contracts such as employment agreements with captains or crew members where there is an expectation of competence and care from employees like sea captains who are entrusted with great responsibility over vessels.

The dissenting opinion in the case of United States v. Atlantic Mutual Insurance Co., argued that the majority's interpretation of the Harter Act was incorrect and overly broad. The dissent believed that, under this act, a ship owner is only exempt from liability for damage to cargo if they have exercised due diligence to make their vessel seaworthy at the beginning of its voyage. In this particular case, it was clear that there had been no such effort made by Atlantic Mutual Insurance Co., as evidenced by their failure to properly secure cargo on board one of their vessels which resulted in significant damage during transit. Therefore, according to the dissenting justices, Atlantic should not be able to claim exemption from liability under the Harter Act because they did not meet its requirements for due diligence.