In United States v. Union Pacific Railroad Company, the United States Supreme Court addressed the issue of whether the Union Pacific Railroad Company was liable for the payment of taxes on the sale of its bonds. The Court held that the Union Pacific Railroad Company was liable for the payment of taxes on the sale of its bonds, as the bonds were issued for the purpose of raising money to finance the construction of the railroad. The Court reasoned that the bonds were a form of property, and thus subject to taxation. The Court further held that the Union Pacific Railroad Company was not exempt from taxation, as the bonds were issued for the purpose of raising money to finance the construction of the railroad, and not for any other purpose. The Court also held that the Union Pacific Railroad Company was not entitled to any exemption from taxation, as the bonds were issued for the purpose of raising money to finance the construction of the railroad, and not for any other purpose.

In United States v. Union Pacific Railroad Company, the Supreme Court was tasked with deciding whether or not a railroad company could be held liable for failing to pay taxes on its land grants from the government. The majority opinion found that the railroad company had no obligation to pay taxes on these lands and thus should not be held liable for any unpaid taxes. Justice Field dissented, arguing that Congress had clearly intended for such payments to be made by railroads when it granted them their land grants in 1862 and 1864; therefore, he argued that they were legally obligated to make those payments regardless of what other laws may have said about taxation of public lands at the time. He further noted that if this decision were allowed to stand then it would create an unfair precedent whereby companies who received similar benefits from government contracts would never have any incentive or legal requirement to fulfill their obligations under those agreements since there would always be some loophole allowing them avoid payment altogether.