In the case of Galveston Electric Company v. City of Galveston et al., 1921, the Supreme Court was asked to determine whether a city ordinance that required street railway companies to pave and maintain streets between their tracks and two feet on either side was constitutional. The Galveston Electric Company argued that this requirement constituted an unlawful taking of property without just compensation, in violation of the Fourteenth Amendment. However, the Supreme Court disagreed with this argument. It held that such a requirement did not constitute an unconstitutional taking because it fell within the police power of states to regulate businesses for public welfare purposes. Therefore, requiring railway companies to pave and maintain portions of public streets they used for their operations could be seen as part of their obligation towards maintaining public safety and convenience.

In the dissenting opinion for Galveston Electric Company v. City of Galveston et al., it was argued that the city's decision to grant a franchise to another company, while still under contract with the plaintiff, violated contractual obligations and constituted an infringement on property rights without due process. The justice contended that this action by the city effectively destroyed or impaired a vested right of property held by Galveston Electric Company under its existing franchise agreement. He further asserted that such actions were not justified merely because they served public interests or convenience; rather, he believed any alteration in contracts should be done through negotiation between parties involved and not unilateral decisions made by one party (in this case, the city). This view emphasizes respect for private contractual agreements as well as protection against arbitrary governmental interference in these agreements.