In the 1921 case Yazoo & Mississippi Valley Railroad Company et al. v. City of Clarksdale, the U.S Supreme Court ruled in favor of Yazoo & Mississippi Valley Railroad Company and other railroads, overturning a lower court's decision that had upheld an ordinance by the city of Clarksdale, Mississippi. The city ordinance required railroad companies to install safety gates at street crossings within its jurisdiction as part of their franchise agreements with the city. However, these requirements were not explicitly stated in their original contracts with the municipality when they received permission to operate there decades earlier. The Supreme Court held that this constituted a violation of due process under Fourteenth Amendment protections because it imposed new obligations on existing contractual relationships without proper compensation or negotiation between parties involved. This ruling reinforced principles limiting government power over private property rights and contract law while also highlighting constitutional limits on municipal regulatory authority over businesses operating within their jurisdictions.

In the dissenting opinion for Yazoo & Mississippi Valley Railroad Company et al. v. City of Clarksdale, Justice McReynolds disagreed with the majority's ruling that upheld a local ordinance requiring railroads to install safety gates at street crossings within city limits. He argued that this requirement was an undue burden on interstate commerce and thus violated the Commerce Clause of the U.S Constitution. According to him, such decisions should be made by Congress or federal regulatory agencies rather than local governments because they have broader perspectives on national transportation needs and can better balance those against safety concerns. Furthermore, he warned that allowing cities to impose their own varied regulations could lead to a chaotic patchwork of rules hampering efficient railroad operations across states.