In the case of Phillips v. City of Mobile in 1907, the United States Supreme Court addressed a dispute over taxation and property rights. The city of Mobile had levied taxes on certain properties owned by Phillips, which he claimed were exempt from such charges under an Alabama state law passed in 1821 that granted tax-exempt status to his lands "forever." However, the city argued that this exemption was voided by a new constitution adopted by Alabama in 1875. The Supreme Court ruled against Phillips, stating that while contracts between states and individuals should generally be respected under the Contract Clause of the U.S Constitution, they are not absolute and can be overridden if there is significant public interest at stake. In this case, it was determined that allowing cities to levy taxes for public purposes served a greater good than upholding individual tax exemptions.

In the dissenting opinion for Phillips v. City of Mobile, it was argued that the city had no right to take over a privately-owned waterworks system without providing just compensation. The justice disagreed with the majority's interpretation of Alabama state law and believed that it did not grant cities such broad powers as to seize private property without due process or fair payment. He also expressed concern about potential abuses of power if municipalities were allowed unchecked authority in this area, warning against an erosion of constitutional protections for private property rights. Furthermore, he disputed the notion that public necessity justified such actions; while acknowledging the importance of water supply services for communities, he maintained that this did not override fundamental legal principles regarding ownership and compensation.