The South Covington & Cincinnati Street Railway Company v. City of Covington case in 1914 revolved around the issue of whether a city ordinance could require a street railway company to pave and maintain the area between its tracks and two feet beyond, even if this requirement was not stipulated in the original franchise agreement. The Supreme Court ruled that such an ordinance did not violate any contractual or constitutional rights of the railway company. It held that while franchises are contracts, they do not exempt companies from future police power regulations aimed at promoting public safety and welfare unless explicitly stated otherwise. Therefore, it concluded that cities have inherent authority to impose reasonable regulations on businesses operating within their jurisdiction for public benefit.

In the dissenting opinion for South Covington & Cincinnati Street Railway Company v. City of Covington, it was argued that the majority's decision to uphold a city ordinance requiring street railway companies to pave and maintain roads around their tracks violated contractual rights. The dissenting justices believed that this requirement constituted an unfair burden on the company, as it had not been included in its original franchise agreement with the city. They contended that such changes should be negotiated between parties rather than imposed unilaterally by one party through legislation. Furthermore, they pointed out inconsistencies in how similar cases were handled across different states due to lack of federal guidance on these issues.