In the case of Gloucester Water Supply Company v. City of Gloucester in 1903, the Supreme Court ruled on a dispute between a private water company and a city over rights to supply water. The Gloucester Water Supply Company had been granted exclusive rights by Massachusetts state law to provide water services within certain areas of the city for fifty years from 1885. However, in 1899, another act was passed allowing cities like Gloucester to establish their own public utilities for supplying water if they were unable to reach an agreement with existing companies. When negotiations failed between the two parties, the City decided to create its own utility service leading to this lawsuit. The Supreme Court held that although states have broad powers under their police authority including providing essential services such as clean drinking water; these powers are not absolute and must respect contractual obligations unless there is clear evidence that it would harm public health or safety which wasn't proven here. Therefore, it upheld previous rulings favoring the private company's claim against interference with its contractually guaranteed monopoly until 1935.

In the dissenting opinion for Gloucester Water Supply Company v. City of Gloucester, it was argued that the city's decision to take over a private water company without compensation violated property rights protected by the Constitution. The justice disagreed with the majority's interpretation of "public use," arguing that it should not be so broadly defined as to include any action taken by a municipality in its capacity as a public entity. He contended that such an expansive definition would effectively nullify constitutional protections against uncompensated takings and could lead to abuses of power by local governments. Furthermore, he believed that there were other legal remedies available if the water company had failed in its duties or obligations, making this drastic measure unnecessary.