In the case of City of St. Louis v. United Railways Company in 1907, the Supreme Court ruled on a dispute between the city and a streetcar company over franchise rights. The city had granted franchises to several smaller companies, which were later consolidated into United Railways Company. However, when these original franchises expired, the city attempted to impose new conditions before renewing them - including requiring that all tracks be laid underground within five years and that fares not exceed three cents per ride. The railway company sued arguing that such changes violated their contract with the city as well as their constitutional rights under Fourteenth Amendment's due process clause (which prohibits states from depriving any person of life, liberty or property without due process). The Supreme Court sided with United Railways Company ruling that while cities have broad powers to regulate public utilities for health and safety reasons they cannot unilaterally change terms of existing contracts or impose unreasonable demands on businesses operating under those contracts.

In the dissenting opinion for City of St. Louis v. United Railways Company, it was argued that the majority's decision to uphold a city ordinance requiring street railway companies to sell eight tickets for a quarter was an overreach of municipal power and violated constitutional protections against impairment of contracts. The dissent contended that this requirement amounted to price fixing by the government, which could lead to arbitrary and unreasonable regulations in other industries as well. It also pointed out that while public utilities may be subject to some regulation due their nature as quasi-public entities, such control should not extend so far as dictating prices without regard for contractual obligations or fair return on investment. Furthermore, it emphasized that any changes in rates should come from mutual agreement between parties involved rather than unilateral imposition by local authorities.