In the case of Citizens' Telephone Company of Jackson v. Fuller, Auditor General of the State of Michigan in 1912, the Supreme Court examined whether a state law that imposed an annual tax on telephone companies was constitutional. The Citizens' Telephone Company argued that this tax violated their Fourteenth Amendment rights to equal protection under the law because it unfairly targeted them while exempting other types of businesses from similar taxation. However, the court ruled against them and upheld Michigan's right to levy such taxes on specific industries or classes if deemed necessary for public welfare. The ruling emphasized states’ power to regulate commerce within their borders and reinforced principles related to taxation equity across different business sectors.

In the dissenting opinion for Citizens' Telephone Company of Jackson v. Fuller, Justice Holmes argued that the state had a right to tax property within its borders and this included intangible assets such as franchise rights. He disagreed with the majority's view that Michigan was taxing something outside of its jurisdiction by including franchise rights in their valuation of telephone companies for taxation purposes. According to him, it was not about where these rights were granted but rather where they were exercised - which was within Michigan's borders. Therefore, he believed that these should be considered taxable property under state law just like any other tangible asset used or held by a company operating in the state.