In the case of Blair, Commissioner v. Oesterlein Machine Company in 1927, the United States Supreme Court ruled on a matter concerning taxation and bankruptcy. The Oesterlein Machine Company had filed for bankruptcy and subsequently received an abatement (reduction) of its taxes from local authorities in Washington D.C., which was later challenged by William P. Blair, the tax commissioner at that time. The court held that under Section 57n of the Bankruptcy Act, taxing authorities could not reassess or increase a bankrupt's taxes after they have been assessed once already during proceedings unless there is fraud involved or mutual mistake between parties regarding material facts affecting such assessments. This decision upheld lower courts' rulings favoring Oesterlein Machine Company against Blair’s appeal to collect additional taxes based on his claim that initial assessment was too low.

In the dissenting opinion for Blair v. Oesterlein Machine Company, Justice Stone argued that the majority's decision was inconsistent with previous rulings of the Court and violated principles of federalism. He contended that it was not within the jurisdiction of a federal court to interfere in state tax matters unless there were clear constitutional violations. In this case, he believed no such violation existed as Maryland had every right to impose taxes on its residents or businesses operating within its borders without interference from federal courts. Furthermore, he disagreed with the majority's interpretation of due process rights under Fourteenth Amendment, arguing that they did not extend to protecting corporations from paying taxes imposed by states where they operate but are not incorporated. He maintained that if a corporation chooses to do business in multiple states, it must be prepared to abide by each state’s laws and regulations including taxation policies.