In the case of San Francisco City and County v. Le Roy in 1890, the U.S Supreme Court ruled on a dispute involving municipal bonds issued by San Francisco. The city had issued these bonds to finance public improvements but later refused to pay them off, arguing that they were invalid because they exceeded a debt limit set by California's constitution. However, bondholders argued that this debt limit did not apply since it was enacted after the bonds were issued. The Supreme Court sided with the bondholders, ruling that laws cannot be applied retroactively unless explicitly stated otherwise in their text or clearly intended by lawmakers. Therefore, even though current law limited municipal debts at lower levels than when these particular bonds were sold, this limitation could not invalidate previously-issued securities as long as those securities complied with laws existing at their time of issuance.

In the dissenting opinion for San Francisco City and County v. Le Roy, it was argued that the city had no right to issue bonds in order to fund public improvements without first gaining approval from voters. The justice believed that this action violated both state law and the California Constitution, which required voter approval before any debt could be incurred by a municipality. He also disagreed with the majority's interpretation of what constituted "indebtedness," arguing that issuing bonds did indeed create a new debt obligation for the city. Furthermore, he contended that allowing such actions would set a dangerous precedent where cities could bypass their constituents' wishes and potentially incur significant debts without their knowledge or consent.