In the 1917 case of Municipal Securities Corporation v. Kansas City, the U.S Supreme Court was tasked with determining whether a city had the right to issue bonds for public improvements without voter approval. The Municipal Securities Corporation argued that Kansas City's issuance of improvement bonds violated Missouri state law which required taxpayer approval before such actions could be taken. However, Kansas City contended that it was within its rights as a municipality to issue these bonds without needing consent from taxpayers or voters. The Supreme Court ruled in favor of Kansas City, stating that municipalities have inherent powers to make necessary improvements and finance them through bond issues if needed. This ruling affirmed cities' autonomy in managing their financial affairs and making decisions about public works projects.

In the dissenting opinion for Municipal Securities Corporation v. Kansas City, Justice Holmes argued that the city's actions did not constitute a breach of contract. He contended that when Kansas City accepted the bonds from Municipal Securities Corporation, it was under no obligation to maintain them as special improvement bonds if they were found to be invalid or illegal. The city had only promised to do its best within legal limits and could not be held accountable for circumstances beyond its control such as changes in law or court decisions declaring certain types of bonds unconstitutional. Therefore, according to Justice Holmes, there was no violation of any contractual agreement by Kansas City when it replaced these invalidated securities with general obligation bonds.