The United States Supreme Court case of UNITED STATES et al. v. LOS ANGELES & SALT LAKE RAILROAD COMPANY in 1926 revolved around a dispute over land rights between the federal government and the Los Angeles & Salt Lake Railroad Company (LA&SL). The railroad company had been granted certain lands by Congress under an act passed in 1866, but later, parts of these lands were included within a national forest reserve established by Presidential Proclamation. The issue was whether or not the railroad's grant took precedence over this proclamation. In its decision, the court ruled that once a tract of land has been identified as being within limits granted to a railway company by Congress, it is withdrawn from public domain and cannot be disposed off without affecting the rights of said railway company even if such disposal occurs before patent issues for that tract. Therefore, any subsequent inclusion into national reserves does not affect prior grants made to railroads unless explicitly stated otherwise by Congress.

In the dissenting opinion for United States et al. v. Los Angeles & Salt Lake Railroad Company, it was argued that the majority's decision to uphold a lower court ruling in favor of the railroad company was incorrect because it failed to properly interpret and apply relevant federal land grant statutes. The dissent contended that these laws were intended to encourage railway construction by providing railroads with alternate sections of public lands along their routes, but not within municipalities where lands had already been granted or reserved for other purposes. In this case, however, the majority allowed LA & Salt Lake Railroad Co., which built its line after Las Vegas became a municipality, to acquire valuable urban plots originally designated as townsite lots under an 1887 Act meant for settlers' homes and businesses - contrary to both statutory language and historical practice treating townsites differently from rural areas in terms of railroad grants. This interpretation effectively expanded railroads' rights at expense of communities they served; hence should be rejected.