In the case of German Alliance Insurance Company v. Home Water Supply Company, 1912, the U.S. Supreme Court ruled in favor of the defendant, Home Water Supply Company. The plaintiff, German Alliance Insurance Co., had sued for damages after a fire destroyed insured property and claimed that it was due to negligence on part of the water company as they failed to supply sufficient water pressure necessary for firefighting efforts. However, the court found no evidence proving that an agreement existed between both parties stipulating specific levels of water pressure required at all times by insurance companies or their policyholders. Therefore, without such explicit contractual obligations or statutory duties imposed upon them regarding maintaining certain pressures constantly irrespective of demand variations throughout different periods during any given day; it was deemed unreasonable to hold public utilities liable under these circumstances where they were merely providing services within their normal operating parameters and capabilities.

In the dissenting opinion for German Alliance Insurance Company v. Home Water Supply Company, Justice Holmes disagreed with the majority's view that a water company could be held liable for damages caused by its failure to supply adequate water pressure during a fire. He argued that there was no contractual obligation between the insurance company and the water supplier, nor did any statute impose such an obligation on public utilities. Furthermore, he contended that it would be unreasonable to hold companies responsible for losses resulting from their inability to provide services in all circumstances, especially when those circumstances are beyond their control like fires or other disasters. This liability would essentially force them into becoming insurers themselves against these risks which they cannot predict or control effectively.