In the case of Ennis Water Works v. City of Ennis, 1913, the U.S Supreme Court dealt with a dispute between a private water company and a city in Texas over contractual obligations. The water company had entered into an agreement to supply water to the city for fire protection and other purposes but later sought to increase its rates. The city refused this request which led to litigation. The court ruled that while contracts between public bodies and private companies are generally subject to revision or abrogation by state legislatures under their police powers, there were limits on these powers when it came down to impairment of contract rights protected by the Constitution's Contract Clause (Article I, Section 10). In this particular instance though, no such impairment was found as per Justice Holmes' opinion; he stated that any reasonable regulation imposed due to changing circumstances would not be considered as impairing contract obligations if they did not destroy them entirely or seriously interfere with their performance.

In the dissenting opinion for Ennis Water Works v. City of Ennis, it was argued that the city's decision to construct its own waterworks system violated a contract previously established with the plaintiff, Ennis Water Works. The justice believed that this action infringed upon constitutional rights by impairing obligations under an existing contract and depriving property without due process of law. He contended that while municipalities have inherent power to provide necessary services like water supply, they must respect contractual relationships when doing so. In his view, if a city enters into a valid agreement granting exclusive privileges for such service provision within its limits for a specified period - as in this case - it cannot simply disregard those terms at will later on without violating constitutionally protected rights.