The U.S. Supreme Court case Adams Express Company v. Kentucky in 1906 revolved around the issue of interstate commerce and state taxation rights. The State of Kentucky had imposed a tax on the gross receipts of Adams Express Company, an interstate carrier company that operated within its borders. The company challenged this tax, arguing it was unconstitutional as it violated their protection under the Interstate Commerce Clause by placing a burden on interstate commerce activities. However, the Supreme Court upheld Kentucky's right to impose such taxes. It ruled that while states cannot directly regulate or place direct burdens upon interstate commerce (which is regulated by Congress), they can indirectly influence it through legitimate exercises of their taxing powers so long as these do not lead to multiple taxation situations for companies operating across different states. This decision affirmed that state governments have some authority over businesses operating within their boundaries even if those businesses are also involved in interstate trade.

In the dissenting opinion for Adams Express Company v. Kentucky, Justice Holmes disagreed with the majority's decision that interstate commerce was not being taxed by Kentucky. He argued that while states have a right to tax property within their borders, they cannot do so when it interferes with federal jurisdiction over interstate commerce. In this case, he believed that taxing an express company on money earned through its business operations constituted such interference because those earnings were derived from both intrastate and interstate activities. The state of Kentucky had no way of distinguishing between these sources of income and therefore could not justly impose a tax without infringing upon federal authority over interstate trade. Thus, in his view, the judgment should be reversed.