In the 1901 case of Arkansas v. Kansas and Texas Coal Company and San Francisco Railroad, the U.S Supreme Court ruled on a dispute over taxation between states and corporations operating across state lines. The State of Arkansas had imposed taxes on two companies - the Kansas & Texas Coal Co., which mined coal in Indian Territory (now Oklahoma) but sold it in Arkansas, and the San Francisco Railroad, which transported goods through several states including Arkansas. Both companies argued that they should not be taxed by individual states as their operations were interstate commerce protected under federal law. However, the court upheld Arkansas' right to tax these businesses within its jurisdiction despite their interstate activities. It held that while Congress has exclusive power over interstate commerce, this does not prevent a state from exercising its authority to tax property or business within its borders even if such business is involved in interstate trade.

The dissenting opinion in the case of Arkansas v. Kansas and Texas Coal Company and San Francisco Railroad argued that the state of Arkansas did not have jurisdiction to regulate interstate commerce, which was a power reserved for Congress under the Constitution. The justices contended that while states could enact laws to protect their citizens' health and safety, they could not use this as a pretext to interfere with interstate commerce. They believed that allowing individual states such control would lead to chaos, as each state might establish its own regulations leading to inconsistencies across borders. Furthermore, they disagreed with majority's interpretation of "commerce" arguing it should be interpreted more narrowly so as not include activities like mining or manufacturing within its scope since these are preliminary steps before goods enter into trade among states.