In the 1893 case of Fort Worth City Company v. Smith Bridge Company, the U.S Supreme Court ruled in favor of Smith Bridge Company. The dispute arose when Fort Worth City failed to pay for a bridge built by Smith Bridge Co., arguing that they were not obligated to do so because Texas law required such contracts be made with domestic companies only. However, the court found this state law unconstitutional as it violated both the Contract Clause and Commerce Clause of the U.S Constitution. The Contract Clause prohibits states from passing laws impairing contractual obligations while Commerce clause prevents states from discriminating against out-of-state commerce or unduly burdening interstate commerce without Congressional approval. Therefore, despite being an Ohio-based company, Smith Bridge Co.'s contract was valid and enforceable under federal law.

In the dissenting opinion for Fort Worth City Company v. Smith Bridge Company, it was argued that the majority's decision to uphold a lower court ruling in favor of Smith Bridge Co. contradicted established legal principles regarding contract law and municipal authority. The dissent contended that Fort Worth City Co., as a municipality, had the right to terminate its contract with Smith Bridge Co., despite not providing explicit reasons for doing so within their agreement. It further asserted that municipalities should have broad discretion over public works projects given their responsibility towards citizens' welfare and safety. Moreover, they disagreed with the majority's interpretation of 'good faith,' arguing instead that good faith does not require an explanation when terminating contracts but rather honest intentions at all times during contractual relations.