In the case of Bank of California, National Association v. Richardson, Treasurer of the State of California (1918), the U.S. Supreme Court was asked to determine whether a state tax on national banks violated federal law or interfered with federal supremacy. The Bank argued that it should not be subject to taxation by the state because it was created and operated under federal law as part of a nationwide banking system established by Congress. However, the court ruled in favor of Richardson, upholding California's right to impose taxes on national banks operating within its borders. The decision affirmed that while national banks are instruments of the Federal government they are also private corporations which benefit from local services and protections provided by states where they operate; thus making them liable for paying state taxes.

In the dissenting opinion for Bank of California, National Association v. Richardson, the justice argued that the majority's decision was inconsistent with previous rulings and infringed upon federal jurisdiction. The justice contended that a state cannot tax a national bank based on its shares because it interferes with federal control over these institutions. They believed this taxation to be an indirect way for states to exert influence over federally chartered entities, which contradicts principles of dual sovereignty in U.S law where both state and federal governments have their own separate jurisdictions. Furthermore, they expressed concern about potential negative impacts on national banks' operations due to varying tax laws across different states if such practices were allowed to continue unchecked.