In the 1918 case of Darling v. City of Newport News, the U.S. Supreme Court ruled in favor of the city, upholding its right to regulate and control a privately-owned public utility company operating within its jurisdiction. The plaintiff, Darling, was an owner of a slaughterhouse who argued that his business had been adversely affected by regulations imposed by the city's health board which required all animals intended for human consumption to be inspected before being slaughtered. He claimed these regulations were unconstitutional as they violated his property rights without due process and amounted to taking private property for public use without just compensation (a violation of Fifth Amendment). However, the court disagreed with this argument stating that such regulatory measures taken in interest of public health did not constitute a 'taking' under constitutional law but rather fell within police powers vested in states or municipalities.

In the dissenting opinion for Darling v. City of Newport News, Justice Holmes disagreed with the majority's decision that a city could be held liable for injuries sustained by an individual due to negligence in maintaining public property. He argued that municipalities should not be treated as corporations and thus should not bear the same responsibilities or liabilities. According to him, cities are political subdivisions of states and their primary function is governance rather than business operations; therefore they shouldn't be subjected to tort liability like private entities would be under similar circumstances. He also expressed concern about potential financial burdens on taxpayers resulting from such lawsuits against cities.