In the case of Detroit v. Detroit Citizens' Street Railway Company in 1901, the city of Detroit sued a private streetcar company over its refusal to comply with municipal regulations regarding fares and service standards. The Supreme Court ruled in favor of the railway company, stating that it was not subject to such regulations due to an existing contract between the city and the company which had been approved by state legislation. This contract granted certain rights and privileges to the railway for thirty years, including protection from any changes or interference by local authorities during this period. Therefore, even though these terms were deemed unfair by some citizens who felt they led to high fares and poor service quality, they could not be altered until after this timeframe had expired without violating contractual obligations upheld under federal law.

In the dissenting opinion for Detroit v. Detroit Citizens' Street Railway Company, Justice Harlan argued that the majority's decision undermined a contract between the city of Detroit and the street railway company. He contended that this contract was protected by both state law and the U.S Constitution, specifically under Article I, Section 10 which prohibits states from passing laws impairing contractual obligations. The justice believed that allowing cities to unilaterally alter contracts with private entities would discourage future investment in public infrastructure projects due to fears of unpredictable changes in terms or conditions. Furthermore, he maintained that such actions could potentially violate citizens’ property rights without just compensation – an infringement on Fifth Amendment protections against taking private property for public use without fair payment.