In the case of City of San Antonio et al. v. San Antonio Public Service Company, 1920, the U.S Supreme Court dealt with a dispute over utility rates between the city and its public service company. The city had set rates for gas and electricity that were lower than what was stipulated in an existing franchise agreement with the public service company. The latter sued to prevent enforcement of these new rates on grounds that they violated their contract rights under federal law as well as state law provisions against confiscation without due process or just compensation. The court ruled in favor of the public service company, finding that while cities have broad powers to regulate utilities for health and safety reasons, they cannot unilaterally alter contractual agreements about rate-setting without violating constitutional protections against impairment of contracts (Article I Section 10). Furthermore, it held that setting utility rates too low could constitute unconstitutional taking if it deprived companies from earning a reasonable return on their investments.

In the dissenting opinion for the case of City of San Antonio et al. v. San Antonio Public Service Company, Justice McReynolds argued that the majority's decision to uphold a city ordinance regulating streetcar fares was an overreach by judicial power and violated principles of fair play and justice. He contended that it was not within the Court's purview to determine whether or not a business could operate profitably under certain rates set by local government, as this would involve speculation about future conditions which are uncertain at best. Furthermore, he believed that such interference in private contractual relationships between businesses and their customers undermined confidence in legal contracts as well as respect for property rights protected under law. In his view, if a company agreed to provide services at specific rates outlined in its franchise agreement with the city, then it should be held accountable to those terms unless they were proven unjust or unreasonable through due process.