In the case of Fair Haven and Westville Railroad Company v. New Haven in 1906, the U.S Supreme Court ruled on a dispute between a city and a railroad company over property taxes. The City of New Haven had imposed taxes on the Fair Haven and Westville Railroad Company for its tracks that ran through public streets. The railroad company argued that it was exempt from these taxes because it held only an easement in the streets, not full ownership. However, the court disagreed with this argument stating that even though they did not own them outright, their exclusive use of those areas constituted taxable property interest under Connecticut law. Therefore, they were liable to pay tax as assessed by New Haven city authorities.

In the dissenting opinion for the case of Fair Haven and Westville Railroad Company v. New Haven, it was argued that the city's right to regulate street railways should not be absolute or arbitrary but must be reasonable and in line with public interest. The justice disagreed with the majority view that allowed New Haven to impose conditions on a railway company beyond what is necessary for public safety, convenience or welfare. He believed this could lead to an abuse of power by local authorities who might use such powers for their own advantage rather than serving public interests. Furthermore, he contended that if a corporation accepts unreasonable conditions under duress because it has no other choice, this does not mean these conditions are justifiable or lawful.