In the case of Denney, as Director of Public Works of Washington, et al., v. Pacific Telephone & Telegraph Company (1927), the Supreme Court ruled in favor of Pacific Telephone & Telegraph Company. The dispute arose when Washington state attempted to impose a tax on telephone poles and wires owned by the company that were located on public highways or streets. The court held that this was unconstitutional because it violated an existing federal statute which granted telegraph companies right-of-way through public lands for their lines without taxation by states. This ruling reinforced the supremacy clause in Article VI of the Constitution, which establishes federal law as "the supreme law of the land," overriding conflicting state laws.

In the dissenting opinion for Denney v. Pacific Telephone & Telegraph Company, it was argued that the state of Washington had a right to regulate and control its public highways, including the placement of telephone poles by utility companies. The dissenting justices believed that this power extended to requiring such companies to relocate their equipment at their own expense when necessary for road improvement projects. They contended that these utilities were granted use of public land under certain conditions and should bear any costs associated with maintaining or altering their infrastructure on said land. This view held that allowing private corporations to pass these expenses onto taxpayers would be an unfair burden on citizens who may not directly benefit from those services provided by the company in question.