In the 1935 case of Atlantic Lumber Co. v. Commissioner of Corporations and Taxation of Massachusetts, the U.S Supreme Court ruled in favor of the state's taxation authority over an out-of-state corporation operating within its borders. The Atlantic Lumber Company, a Maine-based corporation with operations in Massachusetts, challenged a tax assessment by arguing that it was not doing business within Massachusetts but merely had property there for storage purposes. However, evidence showed that they were buying lumber from other states and selling to customers both inside and outside Massachusetts while using their property as a base for these transactions. The court held that this constituted "doing business" under state law which made them liable to pay taxes on all income derived from such activities regardless if it came from interstate commerce or not.

In the dissenting opinion for Atlantic Lumber Co. v. Commissioner of Corporations and Taxation of Massachusetts, it was argued that the majority's decision to uphold a tax on foreign corporations doing business in Massachusetts violated both the Due Process Clause and Commerce Clause of the U.S. Constitution. The dissent contended that this tax unfairly burdened interstate commerce by imposing an additional cost on out-of-state businesses not faced by their in-state counterparts, thereby creating an unconstitutional barrier to trade between states. Furthermore, they believed that this taxation scheme did not meet due process requirements because it failed to provide sufficient connection or nexus between the state taxing authority and activities being taxed - namely, those conducted outside its borders.