In the United States v. Illinois Central Railroad Co., 1937, the U.S Supreme Court ruled in favor of the government, stating that a railroad company could not claim immunity from federal taxation on land granted to it by Congress. The case arose when Illinois Central Railroad Company argued that lands given to them under an Act of Congress in 1850 were exempt from a tax levied by the Agricultural Adjustment Act of 1933. They claimed this exemption based on their interpretation of language within their original land grant legislation which stated they would be free from all taxes for six years after completion of any section of their road. However, the court disagreed with this interpretation and held that such exemptions only applied to state and local taxes but did not extend to federal ones.

In the dissenting opinion for United States v. Illinois Central Railroad Co., it was argued that the majority's decision to uphold a lower court ruling, which allowed Illinois Central Railroad Company to retain submerged lands under Lake Michigan, contradicted previous legal precedents and interpretations of public trust doctrine. The dissenting justices contended that these lands should be held in trust by the state for public use rather than being privately owned. They believed this case presented an opportunity to clarify and strengthen public rights over navigable waters and their underlying soils, but instead saw it as a missed chance due to what they viewed as an incorrect application of law by the majority. Furthermore, they expressed concern about potential negative implications on future cases involving similar issues if private entities were permitted ownership of such lands at expense of public interest.