In the Shaw v. City of Covington case in 1903, the U.S Supreme Court ruled on a dispute involving property rights and municipal authority. The plaintiff, Shaw, owned land that was being used by the city of Covington for street purposes without his consent or any legal condemnation proceedings. He sought to recover possession of his property and damages for its use. The lower court dismissed his petition which led him to appeal to the Supreme Court. The Supreme Court held that while municipalities have certain powers over public streets, they do not possess an absolute right to appropriate private property without following due process or providing compensation as required under constitutional law protecting private property rights against governmental takings. Therefore, it reversed the decision made by Kentucky's highest court and remanded back with instructions consistent with this opinion; thus ruling in favor of Shaw.

The dissenting opinion in the case of Shaw v. City of Covington argued that the city's actions were not unconstitutional and did not infringe upon any rights protected by the Fourteenth Amendment. The justice believed that a municipality has inherent power to regulate its own affairs, including public utilities such as waterworks, for the benefit of its citizens. They contended that when a private corporation is granted permission to operate within a city, it does so with an understanding that it may be subject to certain regulations or restrictions imposed by local authorities for public welfare purposes. In this context, they disagreed with the majority view which held these municipal regulations as arbitrary and unreasonable interference with contractual relationships between corporations and consumers.