In the United States v. Dakota-Montana Oil Co., 1932, the Supreme Court ruled on a dispute over oil and gas leases on public lands. The government had issued these leases to private companies but later sought to cancel them, arguing that they were invalid because they violated certain statutory requirements. The court held that while some of these requirements had indeed been violated, this did not automatically render the leases void; instead, it was up to the Secretary of Interior's discretion whether or not to declare them forfeited. Furthermore, even if he chose not to do so immediately upon discovering a violation, he could still exercise his power at any time before rights under lease became vested in good faith without notice of prior violations by lessee or its predecessors in interest.

In the dissenting opinion for United States v. Dakota-Montana Oil Co., Justice McReynolds argued that the majority's decision was a departure from established principles of law and equity. He contended that the government, as an ordinary proprietor, had no right to recover oil extracted by lessees who acted in good faith under valid leases issued by authorized agents of the government. The justice believed it was unjust to penalize these individuals for their reliance on what they reasonably assumed were legal contracts. Furthermore, he asserted that there was no evidence showing any fraud or collusion between lessees and officials issuing leases; therefore, it would be unfair to hold them responsible for mistakes made by those officials. Lastly, he pointed out inconsistencies in how such cases had been handled previously - sometimes allowing recovery and other times not - which further complicated matters.