The U.S. Supreme Court case of Commonwealth of Virginia v. State of West Virginia in 1914 revolved around a boundary dispute between the two states, which originated from when West Virginia separated from Virginia during the Civil War. The main issue was determining whether certain counties belonged to either state based on an agreement made in 1863, and how much debt West Virginia owed to Virginia for taking over part of its territory. The court ruled that while the original terms were valid under international law, they could not be enforced due to changes since then including population shifts and economic developments. Therefore, it held that both states had sovereignty over their respective territories as defined by current boundaries rather than historical ones.

In the dissenting opinion for the case of Commonwealth of Virginia v. State of West Virginia, Justice Holmes disagreed with the majority's decision to award damages to Virginia. He argued that there was no clear evidence showing that West Virginia had agreed to take on a portion of Virginia's debt when it became a separate state during the Civil War. The only agreement between them, according to him, was an ambiguous clause in their constitution which did not explicitly mention any financial obligations. Furthermore, he pointed out that even if such an obligation existed at some point in time, it would have been nullified by subsequent events like Congress' recognition of West Virginia as a separate state and its silence regarding any debts owed by this new entity towards its parent state. Therefore, he concluded that imposing such an obligation after so many years without any prior indication or enforcement seemed unjust and arbitrary.