In the case of William Waters v. The Merchants' Louisville Insurance Company, Waters had taken out an insurance policy with the company to cover a shipment of goods he was sending from New Orleans to Louisville. After his ship encountered difficulties and sank, Waters filed a claim for damages against the company but they refused to pay him on grounds that their contract did not cover losses due to “perils of navigation” or any other perils beyond their control. In response, Waters argued that since he paid for coverage under all risks associated with shipping goods by water, it should be assumed that this included perils such as those which caused his loss. The Supreme Court ultimately sided in favor of Waters and held that when parties enter into contracts involving marine insurance policies covering shipments over navigable waters, it is impliedly understood between them that there will be protection against all ordinary risks associated with such voyages unless otherwise specified in writing within the agreement itself.

In the case of William Waters v. The Merchants' Louisville Insurance Company, Justice McLean delivered a dissenting opinion in which he argued that the plaintiff was entitled to recover damages for breach of contract. He reasoned that under Kentucky law, an insurance company is liable for any loss or damage sustained by its insured when it fails to fulfill its contractual obligations. In this particular instance, the defendant had failed to pay out on a policy issued by them and thus should be held responsible for any losses suffered as a result of their negligence. Furthermore, Justice McLean noted that even if there were some ambiguity in the language used within the policy itself regarding liability coverage, such ambiguities should be interpreted against those who drafted them - namely insurers - and not against those seeking protection from them – namely insureds like Mr Waters.