In the case of Detroit United Railway v. City of Detroit et al., 1920, the U.S Supreme Court was tasked with determining whether an ordinance passed by the city of Detroit requiring street railway companies to sell eight tickets for a quarter (a reduced fare) was constitutional. The court ruled in favor of the city, stating that it did not violate any contractual obligations between the company and municipality nor did it infrive upon due process rights under Fourteenth Amendment as claimed by railway company. The court held that such regulation fell within police power scope granted to states and municipalities for public welfare promotion; thus, they could regulate fares charged by utility companies operating within their jurisdiction without constituting contract impairment or property deprivation without due process.

The dissenting opinion in the Detroit United Railway v. City of Detroit case argued that the majority's decision was a departure from established principles of law and equity. The dissent emphasized that it is not within the power of a municipality to unilaterally alter or abrogate contracts, even those related to public utilities like street railways. It contended that such actions undermine contractual obligations and property rights protected by due process under the Fourteenth Amendment. Furthermore, they asserted that any changes to existing agreements should be subject to negotiation between parties rather than imposed through legislation or court rulings. They also expressed concern about potential negative impacts on private investment if municipalities could arbitrarily change terms of contracts with utility companies.