In the 1917 case of Great Northern Railway Company et al. v. State of Minnesota ex rel. Village of Clara City, the U.S Supreme Court ruled in favor of the railway company, overturning a decision by the state court that had ordered it to build and maintain a depot station at Clara City as per an earlier agreement with local authorities. The Supreme Court held that such an order was beyond what could be demanded under reasonable regulations for public convenience and necessity, thus infringing upon property rights protected by due process clause under Fourteenth Amendment. It further stated that while states have power to regulate railroads for benefit of public, they cannot compel them into new enterprises or extensions not justified by present or prospective necessities.

In the dissenting opinion for Great Northern Railway Company et al. v. State of Minnesota ex rel. Village of Clara City, Justice Holmes disagreed with the majority's decision that a state law requiring railroads to install safety devices was unconstitutional due to it interfering with interstate commerce. He argued that states should have the authority to regulate businesses within their borders for public safety reasons, even if those businesses are involved in interstate commerce. According to him, this power is not superseded by Congress' control over interstate commerce unless there is a direct conflict between state and federal laws or regulations which did not exist in this case.