In the 1928 case of Gilchrist et al., Constituting The Transit Commission, et al. v. Interborough Rapid Transit Company et al., the U.S Supreme Court dealt with a dispute between New York City's transit commission and the Interborough Rapid Transit Company (IRT). The IRT had been granted a contract to operate subway lines in Manhattan under specific rates set by city authorities. However, when these rates were later reduced by legislation, the IRT sued on grounds that this constituted an unconstitutional impairment of their contractual rights and violated due process protections against arbitrary rate-setting. The Supreme Court ruled in favor of the transit commission, finding that public utilities like transportation companies are subject to regulation for public benefit even if it alters pre-existing contracts or reduces profits.

In the dissenting opinion for Gilchrist et al., Constituting The Transit Commission, et al. v. Interborough Rapid Transit Company et al., Justice Stone argued that the majority had overstepped its bounds by intervening in a matter of state law and policy. He contended that it was not within the jurisdiction of federal courts to interfere with New York's regulation of its own public utilities unless there was clear violation or abuse of constitutional rights, which he did not believe to be present in this case. Furthermore, he disagreed with the majority's interpretation and application of due process clause as it related to rate-setting for public utilities; instead asserting that states should have broad discretion in such matters without interference from federal judiciary.