In the 1894 case of Delaware and Hudson Canal Company v. Pennsylvania, the U.S. Supreme Court ruled that a state could not impose a tax on goods transported from other states or countries through its territory to another state or country. The court found such taxation unconstitutional as it violated the Commerce Clause of the Constitution which grants Congress exclusive power over interstate commerce. The dispute arose when Pennsylvania imposed taxes on coal mined in Pennsylvania but shipped out-of-state by Delaware and Hudson Canal Company, an out-of-state corporation operating railroads within Pennsylvania's borders for this purpose. This decision reinforced federal supremacy over interstate commerce regulation, limiting states' rights to interfere with such activities.

In the dissenting opinion for Delaware and Hudson Canal Company v. Pennsylvania, Justice Brewer argued that the tax imposed by Pennsylvania on freight transported out of state was not a regulation of interstate commerce but rather an exercise of its power to tax property within its jurisdiction. He contended that the coal mined in Pennsylvania and carried away by railroads is subject to taxation just as any other property in the state would be. Furthermore, he disagreed with majority's interpretation of Coe v. Errol case, asserting it did not establish a principle that goods destined for export are exempt from taxation while still within their original states' borders; instead, it merely held that such goods could be taxed if they had come to rest or were being used or consumed within those borders before exportation began. Therefore, according to Justice Brewer’s view, there was no constitutional barrier preventing Pennsylvania from taxing coal intended for shipment outside its boundaries so long as this occurred prior to actual transportation commencing.