In the case of City of New York v. New York Telephone Company in 1922, the Supreme Court ruled on a dispute between the city and telephone company regarding property taxes. The city had assessed taxes on conduits, wires, and other equipment owned by the phone company that were located under public streets. The phone company argued that these items should not be taxed as real estate because they were personal property used for its business operations. However, both lower courts sided with the city's argument that this infrastructure was part of land improvements and thus taxable as real estate. The Supreme Court affirmed these decisions stating that while such properties are indeed essential to conducting business for companies like telephone utilities; their permanence in location makes them subject to taxation just like any other permanent structures or fixtures attached to land would be considered real estate for tax purposes. This decision set an important precedent concerning how municipalities could levy taxes against utility companies' infrastructures.

In the dissenting opinion for the case City of New York v. New York Telephone Company, Justice McReynolds argued that there was no legal basis to compel a private company to perform services without compensation. He contended that while public utilities have certain obligations due to their nature and relationship with the public, these do not extend so far as requiring them to provide free services at their own expense. The majority's decision, he believed, set a dangerous precedent by allowing municipalities or other governmental entities to demand uncompensated work from businesses under the guise of serving public interest. This could potentially lead towards an unjust exploitation of private enterprises by government bodies in future cases.