In the case of District of Columbia v. Barnes in 1904, the U.S Supreme Court ruled that a municipal corporation such as the District of Columbia could be held liable for damages caused by its negligence or mismanagement. The plaintiff, Mr. Barnes, had sued after his property was damaged due to faulty sewer construction and maintenance by city workers which led to flooding during heavy rainfalls. The court found that while municipalities are generally not responsible for damages resulting from legislative functions (like passing laws), they can be held accountable when performing corporate functions like maintaining public utilities or providing services directly affecting citizens' properties. Therefore, it upheld an award granted to Mr.Barnes by lower courts against D.C., setting a precedent for holding municipalities accountable for their actions in certain circumstances.

In the dissenting opinion for District of Columbia v. Barnes, Justice Harlan argued that the Supreme Court should not have jurisdiction over this case because it was a local matter concerning Washington D.C.'s water supply and did not involve federal law or constitutional issues. He believed that Congress had given authority to local courts in D.C., which were better suited to handle such cases due to their familiarity with local laws and circumstances. Furthermore, he contended that if every dispute involving municipal regulations in Washington D.C. could be brought before the Supreme Court, it would overwhelm the court's docket and distract from its primary function of interpreting federal law and resolving disputes between states.