In the case of Honolulu Rapid Transit & Land Company v. Territory of Hawaii, 1908, the U.S Supreme Court ruled in favor of the Territory of Hawaii. The dispute arose when Honolulu Rapid Transit & Land Company claimed that a law passed by the Hawaiian government was unconstitutional as it interfered with their franchise rights to operate street railways in Honolulu. They argued that this violated both their contract and due process rights under the Fourteenth Amendment. However, after reviewing previous court decisions and considering arguments from both sides, Justice Day delivered an opinion for a unanimous court stating that there had been no violation because franchises are subject to alteration or repeal by state legislatures unless explicitly stated otherwise within contracts themselves.

In the dissenting opinion for Honolulu Rapid Transit & Land Company v. Territory of Hawaii, Justice Harlan disagreed with the majority's view that a franchise granted by the Hawaiian government to a private company could be revoked without compensation. He argued that this was contrary to principles of justice and fairness as well as established legal precedent. The franchise had been given in good faith and represented significant investment on behalf of the company, which should not be arbitrarily taken away. Furthermore, he contended that such an action would undermine confidence in governmental contracts and discourage future private investment in public infrastructure projects.