The U.S. Supreme Court case Warner Valley Stock Company v. Smith in 1896 revolved around a dispute over water rights between the Warner Valley Stock Company and an individual named Smith. The company had been using a stream for irrigation, but Smith claimed that he had prior right to use the water because of his earlier settlement on the land through which it flowed. The court ruled in favor of Smith, upholding his priority claim based on riparian rights - legal principles granting certain privileges to those who own land containing or bordering bodies of water like rivers or streams. This decision reinforced that such rights are determined by state law rather than federal law and affirmed that early settlers have precedence when it comes to access and usage of natural resources.

In the dissenting opinion for Warner Valley Stock Company v. Smith, the justice disagreed with the majority's interpretation of water rights law in relation to public lands. The dissent argued that under common law principles, a person who first appropriates water from a stream on public land and puts it to beneficial use has superior right over later users. This principle was recognized by Congress when they passed laws encouraging settlement and development of arid western states where water is scarce. Therefore, according to this view, Warner Valley Stock Company had established its right through prior appropriation before Smith began his use of the stream's waters for irrigation purposes. The justice believed that denying such priority would discourage investment in improvements necessary for productive use of these lands due to fear that their investments could be rendered worthless by subsequent claimants.