In the United States v. Fullard-Leo et al., 1946, the U.S Supreme Court ruled in favor of private landowners on Palmyra Island, a Pacific atoll claimed by both Hawaii and the federal government. The Fullard-Leos had purchased most of Palmyra's lands in 1922 but during World War II, the Navy occupied it for military purposes without compensating them. Afterward, Congress passed legislation to acquire all rights to Palmyra from any claimants including Hawaii and its citizens like Fullard-Leos. However, they contested this move arguing that their property rights were protected under Fifth Amendment which prohibits taking private property for public use without just compensation. The court agreed with them stating that even though Congress has power over territories; it cannot simply legislate away established property rights without due process or fair compensation as per Fifth Amendment protections against uncompensated takings by government entities. Thus while recognizing federal jurisdiction over territorial acquisitions such as Palmyra Atoll; this case also affirmed constitutional protection of individual property rights within those territories.

In the dissenting opinion for United States v. Fullard-Leo et al., Justice Murphy argued that the U.S. government's claim to Palmyra Island was invalid because it did not follow proper legal procedures when acquiring territory from a private owner. He believed that the Fullard-Leos, who had purchased the island in 1922, still held rightful ownership as they were never properly compensated by the government for their property. Furthermore, he contended that Congress' Joint Resolution of annexation in 1898 did not include Palmyra Island and thus could not be used as justification for its seizure by federal authorities years later. In his view, this case represented an overreach of governmental power at expense of individual property rights and due process under law.