In the 1896 case of Adams Express Company v. Ohio State Auditor, the U.S. Supreme Court ruled that states could tax interstate commerce companies based on their property within state borders without violating the Commerce Clause of the Constitution. The Adams Express Company was an interstate carrier with offices and other properties in several states, including Ohio. The company argued that it should not be subject to taxation by individual states as its operations constituted interstate commerce which is under federal jurisdiction according to Article I, Section 8 of the Constitution (the Commerce Clause). However, Ohio imposed a tax on all personal property owned by individuals or corporations within its boundaries regardless if they were involved in intrastate or interstate business activities. The court held that while Congress has exclusive authority over regulating trade between different states, this does not prevent a state from taxing personal property situated within its territory even if such property is used for purposes related to interstate commerce. Therefore, although Adams Express Company's operations spanned across multiple states and fell under federal regulation due to being part of "interstate commerce", it still had physical assets located specifically in Ohio which made them liable for taxation under state law.

In the dissenting opinion for Adams Express Company v. Ohio State Auditor, Justice Harlan argued that the majority's decision was inconsistent with previous rulings of the court and violated principles of federalism. He contended that a state cannot tax property located outside its jurisdiction, even if it is owned by a corporation doing business within its borders. According to him, this principle should apply regardless of whether or not the property in question generates income for said corporation. Furthermore, he believed that allowing states to impose such taxes would lead to double taxation since other states could also claim taxing rights over the same property based on their own connections with it (e.g., location). This situation would be unfair and burdensome for corporations operating across multiple jurisdictions.