In the 1923 case of Baker v. Druesedow, the U.S. Supreme Court was asked to determine whether a Texas tax collector could levy taxes on railway cars that were owned by an out-of-state company but used in Texas. The International & Great Northern Railway Company had been placed into receivership and its assets were being managed by a receiver appointed by a federal court in Missouri. Despite this, Harris County Tax Collector Druesedow attempted to collect property taxes from the receiver for use of the railcars within his jurisdiction. The Supreme Court ruled against Druesedow, finding that under federal law, property held in receivership is immune from state taxation if it would interfere with or obstruct control or management of such property as directed by appropriate federal authority (in this case, the Missouri court). Therefore, because levying these taxes would have interfered with federally-directed management of railroad properties across state lines - which are subject to regulation under Congress's Commerce Clause powers - they were deemed unconstitutional.

In the dissenting opinion for Baker v. Druesedow, Justice Holmes argued that the majority's decision to invalidate a Texas tax on interstate commerce was incorrect. He contended that the state had every right to impose such a tax as long as it did not discriminate against or unduly burden interstate commerce. In his view, this particular tax did neither of those things; instead, it merely required companies operating within Texas borders to pay their fair share for public services provided by the state. Furthermore, he pointed out that there were many other ways in which states could and did legally regulate and tax businesses involved in interstate commerce without violating federal law or infringing upon Congress' authority over such matters.