The U.S. Supreme Court case Owensboro Waterworks Company v. Owensboro in 1905 revolved around a dispute between the city of Owensboro, Kentucky and its water supply company over contract terms for providing water to the city's fire hydrants. The original agreement stipulated that the company would provide this service "forever" at an annual rate of $100 per hydrant, but after several years, it sought to increase this fee due to rising costs. When the city refused, arguing that they had a perpetual contract at the agreed-upon price, litigation ensued. The court ruled in favor of the City of Owensboro on appeal from Kentucky's highest court which upheld lower courts' decisions against increasing rates as requested by Owenbsoro Waterworks Company. The Supreme Court held that while contracts are generally inviolable under law (as part of constitutional protection), there is also public interest consideration where utilities are concerned - particularly those related with safety like firefighting services - thus allowing municipalities some leeway in renegotiating such agreements if circumstances warrant.

In the dissenting opinion for Owensboro Waterworks Company v. Owensboro, Justice Harlan argued that the majority's decision was a departure from established principles of constitutional law and an unwarranted intrusion into state affairs. He contended that it is not within the purview of federal courts to interfere with local government decisions regarding public utilities unless there is clear evidence of abuse or violation of contractual obligations. In this case, he saw no such evidence against the City of Owensboro in its regulation and pricing control over water supply services provided by Owensboro Waterworks Company. The city’s actions were simply exercises in their police power to protect public health and welfare which should be respected by federal courts as long as they are reasonable and do not infringe upon any specific provisions in contracts or laws.