In the 1903 case of Huntington v. The City of New York et al., the U.S. Supreme Court ruled in favor of the city, upholding its right to regulate and control public utilities within its jurisdiction. Collis P. Huntington, a railroad tycoon, had challenged this authority by arguing that his company's franchise rights were being violated by New York City's attempt to impose regulations on street railways owned by him under lease agreements with other companies. However, Justice Oliver Wendell Holmes Jr., writing for the majority, rejected these claims and asserted that municipalities have broad powers over their streets and can enforce reasonable conditions on franchises operating therein without infringing upon any constitutional protections or contractual obligations.

In the dissenting opinion for Huntington v. The City of New York, Justice Harlan argued that the majority's decision was inconsistent with previous rulings and violated principles of equity. He contended that the city had no right to arbitrarily change its contract with bondholders without their consent, even if it was in a financial crisis. Harlan believed this action constituted an impairment of contractual obligations which is prohibited by the Constitution. Furthermore, he asserted that allowing such changes would undermine public confidence in municipal bonds as secure investments because cities could alter terms whenever they faced financial difficulties. Therefore, he disagreed with the court's ruling upholding New York City’s decision to reduce interest rates on its water bonds from 7% to 3%.