In the case of City and County of Denver et al. v. Denver Union Water Company in 1917, the Supreme Court was asked to determine whether a water company could be compelled by local government to extend its services beyond what it had originally agreed upon in its franchise agreement with that government. The court ruled that while public utilities have an obligation to serve all customers within their service area, this obligation does not extend beyond the boundaries set forth in their original agreements unless those agreements specifically state otherwise. Therefore, if a city or county wants a utility company to expand its services into new areas, it must negotiate these terms as part of a new or amended agreement rather than trying to compel such expansion through legal action.

In the dissenting opinion for the case City and County of Denver et al. v. Denver Union Water Company, Justice McReynolds disagreed with the majority's decision that upheld a lower court ruling in favor of Denver Union Water Company. He argued that this decision was inconsistent with previous rulings by the Supreme Court regarding similar cases involving public utilities and their rates. According to Justice McReynolds, it is not within a company’s rights to set its own rates without any regulatory oversight or intervention from local government bodies; doing so would undermine public interest and welfare considerations which are paramount in such matters. Furthermore, he contended that there were no sufficient grounds provided by the majority to justify their departure from established legal precedents on this issue.