In the 1902 case Union and Planters' Bank v. Memphis, the U.S. Supreme Court dealt with a dispute over bonds issued by the city of Memphis, Tennessee. The city had defaulted on its bond payments due to financial difficulties following the Civil War and Reconstruction period. As part of a plan to resolve its debts, it proposed issuing new bonds at lower interest rates in exchange for old ones but this was opposed by some creditors including Union and Planters’ Bank who sued instead for full payment. The main issue before the court was whether or not such an arrangement violated constitutional protections against impairing contract obligations (Article I Section 10). The court ruled that while states cannot pass laws impairing contractual obligations, they can still modify their own contracts if done in good faith as part of bankruptcy proceedings or similar debt adjustments. Therefore, despite acknowledging that Memphis's actions did technically alter existing contractual agreements with bondholders like Union & Planters' Bank; it held these changes were permissible under certain circumstances such as when necessary to address insurmountable fiscal crises which threatened public welfare.

In the dissenting opinion for Union and Planters' Bank v. Memphis, Justice Harlan argued that the majority's decision was inconsistent with previous rulings of the Court regarding municipal bonds. He contended that a city should not be allowed to repudiate its debts simply because it has undergone changes in its charter or government structure. According to him, these alterations do not absolve a municipality from fulfilling its obligations as they are still essentially the same entity despite any modifications made over time. Furthermore, he emphasized that creditors have an expectation of repayment when lending money to cities and this trust is undermined if municipalities can evade their responsibilities through legal technicalities such as reorganization or reincorporation under different charters. This could potentially discourage future investments in public projects due to increased risk which would ultimately harm society at large.