In the 1898 case of Raton Water Works Company v. Raton, the U.S. Supreme Court ruled in favor of the city of Raton, New Mexico against a water company that had been granted exclusive rights to supply water to its residents. The court held that such an agreement was not legally binding because it violated public policy by granting a monopoly and infringing on future legislative power. The decision emphasized that no legislature can bargain away the public health or public property for more than its term, and any contract purporting to do so could be altered or revoked at will by subsequent legislatures as part of their duty towards citizens' welfare.

The dissenting opinion in the case of Raton Water Works Company v. Raton argued that the majority's decision was a violation of contract rights and property rights, which are protected by the Constitution. The dissenters believed that when the city granted an exclusive franchise to supply water to its inhabitants, it entered into a binding contract with the company. They contended that this agreement could not be unilaterally altered or terminated by subsequent legislation without violating constitutional protections against impairing contractual obligations. Furthermore, they asserted that any attempt by government entities to regulate rates charged for services provided under such contracts would constitute an unlawful taking of private property without just compensation.