The U.S. Supreme Court case American Toll Bridge Co. v. Railroad Commission of California et al., 1938, revolved around the issue of whether a state could regulate toll rates on privately owned bridges that span navigable waters, which are under federal jurisdiction for purposes of commerce regulation. The American Toll Bridge Company had built and operated a bridge across San Francisco Bay in California and was charging what it deemed reasonable tolls for its use. However, the Railroad Commission of California sought to reduce these charges by imposing lower rates based on state law provisions governing public utilities' fees. The company challenged this action as unconstitutional interference with interstate commerce powers reserved exclusively to Congress under the Commerce Clause (Article I, Section 8) of the U.S Constitution. In ruling against the company's claim, however, the Supreme Court held that while states cannot interfere with or obstruct national authority over interstate commerce matters such as navigation rights on waterways like San Francisco Bay; they can exercise their traditional police power functions including regulating local aspects related to safety and welfare concerns - here represented by fair pricing practices affecting users within their jurisdictions using facilities like private bridges crossing those waterways.

In the dissenting opinion for the case American Toll Bridge Co. v. Railroad Commission of California et al., Justice McReynolds argued that the majority's decision to uphold state regulation of toll rates was a violation of contract rights protected by the Constitution. He contended that when American Toll Bridge Company purchased the bridge, they did so under an agreement with California which allowed them to set their own tolls without interference from state authorities. This contractual right, he believed, should be upheld and respected by courts as it is constitutionally protected against impairment by states under Article I, Section 10 of U.S Constitution (the Contract Clause). Thus, in his view, any subsequent legislation or regulatory action attempting to control these agreed-upon terms would constitute an unconstitutional breach of this contract.