In the case of New Orleans v. Citizens' Bank in 1896, the Supreme Court ruled that a city could not be held liable for damages caused by its failure to maintain public works if it was not legally obligated to do so. The dispute arose when Citizens' Bank sued the City of New Orleans for damages after their property was flooded due to inadequate maintenance of drainage canals by the city. The court found that while cities have an obligation to provide certain services and maintain public infrastructure, they are only liable for damages resulting from negligence if there is a statutory duty imposed on them requiring such maintenance or repair. In this case, no such legal obligation existed; therefore, despite any moral responsibility felt by the city towards maintaining these canals properly, they were under no legal compulsion and thus could not be held accountable financially.

In the dissenting opinion for New Orleans v. Citizens' Bank, Justice Harlan disagreed with the majority's decision to uphold a Louisiana law that allowed New Orleans to levy taxes on banks based on their capital stock and real estate holdings. He argued that this taxation was unconstitutional because it violated the Equal Protection Clause of the Fourteenth Amendment by treating national banks differently from other corporations or businesses in terms of tax liability. Furthermore, he contended that such differential treatment could potentially destabilize national banking institutions and undermine federal authority over them. Lastly, he expressed concern about states having too much power to regulate and control federally chartered entities like national banks through taxation policies.