In the case of New York Electric Lines Company v. Empire City Subway Company, 1914, the Supreme Court was asked to determine whether or not a contract between two companies could be enforced if it violated state law. The New York Electric Lines Company (NYELC) had entered into an agreement with Empire City Subway Company (ECSC), which required NYELC to maintain and repair certain electrical conduits owned by ECSC. However, this contract was in violation of a New York state law that prohibited any company other than the owner from maintaining such equipment. When NYELC refused to perform its contractual obligations citing this law, ECSC sued for breach of contract. The Supreme Court ruled in favor of NYELC stating that contracts which violate public policy as expressed through statute are unenforceable regardless of their private benefits. This decision reinforced the principle that parties cannot enter into agreements that contravene established laws even when both sides willingly consented at inception.

In the dissenting opinion for New York Electric Lines Company v. Empire City Subway Company, Justice Holmes disagreed with the majority's decision to uphold a lower court ruling that allowed Empire City Subway Company to charge fees for use of its underground conduits by other telegraph and telephone companies. He argued that this was an unjustifiable monopoly granted by the city of New York in violation of state law prohibiting such monopolies. Furthermore, he contended that it was against public policy as it hindered competition and innovation in communication services. The justice believed there should be no exclusive rights given to one company over others when using public infrastructure like streets or subways, especially when these are essential facilities necessary for providing important services like telecommunications.