The United States v. Shelby Iron Company case in 1926 revolved around the issue of whether or not a private corporation could be held liable for damages caused by the operation of a dam owned by it, which resulted in flooding and consequent damage to government property. The Supreme Court ruled that the company was indeed responsible for such damages as they were foreseeable consequences of its actions. The court stated that when an entity creates a situation that is likely to cause harm if left unattended, it has a duty to prevent any potential damage from occurring - even if this requires taking action beyond what would normally be expected under common law principles. This ruling established important precedents regarding corporate liability and responsibility towards public property.

The dissenting opinion in the United States v. Shelby Iron Company case argued that the government should not be allowed to recover payments made under a mistake of law, as it would set a dangerous precedent for future cases. The dissenters believed that if such recovery was permitted, it could potentially lead to an abuse of power by the government and infringe upon individual rights. They also pointed out inconsistencies in how this principle had been applied in previous cases, arguing that there needed to be more clarity and consistency moving forward. Furthermore, they contended that allowing recovery would undermine confidence in final judgments and create uncertainty about legal obligations.