In the United States v. William Cramp & Sons Ship & Engine Building Company case of 1906, the U.S. Supreme Court ruled in favor of William Cramp & Sons, a shipbuilding company that had been sued by the federal government for alleged violation of customs laws. The dispute arose when the company imported certain materials duty-free under a law allowing such imports for use in naval construction and then used some of these materials to build ships for private customers rather than solely for navy vessels as stipulated by law. The court held that while this was technically against regulations, it did not constitute fraud or an attempt to evade duties because there was no intent to deceive on part of the company; they believed their actions were within legal bounds due to ambiguous wording in legislation regarding what constituted "use" in naval construction. Therefore, penalties associated with fraudulent evasion were deemed inappropriate and excessive.

In the dissenting opinion for United States v. William Cramp & Sons Ship & Engine Building Company, Justice Harlan argued that the majority's decision was inconsistent with previous rulings and could potentially undermine national security. He contended that Congress had clear constitutional authority to regulate commerce and provide for the common defense, which included entering into contracts necessary to build naval vessels. In his view, it was not within the purview of courts to question whether such contracts were wise or beneficial; their role was simply to ensure they did not violate any explicit constitutional prohibitions. By invalidating a contract on grounds of imprudence or potential fraud - matters he believed should be left up to legislative discretion - Harlan feared that this ruling would set a dangerous precedent by allowing judicial interference in areas best left under congressional control.