In the 1910 case of Merrimack River Savings Bank v. City of Clay Center, the U.S Supreme Court ruled in favor of Merrimack River Savings Bank. The bank had purchased bonds from the city under a Kansas law that allowed cities to issue bonds for public utilities and sell them to private investors. However, after an amendment was passed prohibiting such sales unless approved by voters, Clay Center refused to pay interest on these bonds claiming they were invalid due to noncompliance with this new requirement. The court held that since the original law did not require voter approval at time when these particular bonds were issued and sold, it could not be applied retroactively thereby making those transactions illegal or voiding obligations arising out of them. Therefore, despite changes in state laws post-issuance/sale which might have otherwise invalidated such securities if issued thereafter without complying with newer requirements (like obtaining prior voter approval), previously validly issued ones remained enforceable against issuer as per terms agreed upon during their issuance.

The dissenting opinion in the case of Merrimack River Savings Bank v. City of Clay Center argued that the city should not be held liable for bonds it had issued to fund a waterworks project, as there was no evidence that the city or its officers acted fraudulently when issuing them. The justice believed that while some irregularities may have occurred during their issuance, these did not necessarily mean they were invalid. He also noted that holding cities accountable for such actions could potentially discourage them from undertaking public improvement projects in future due to fear of legal repercussions. Furthermore, he pointed out inconsistencies between this ruling and previous ones regarding similar matters and expressed concern about setting a precedent where municipalities would be held responsible even if they acted without fraudulent intent.