In the 1904 case of Dobbins v. Los Angeles, the U.S. Supreme Court ruled in favor of plaintiff J.D. Dobbins, who had been taxed by the city on his gross receipts from a federal contract for carrying mail between post offices within Los Angeles city limits. The court held that such taxation was unconstitutional as it interfered with federal operations and violated principles of intergovernmental tax immunity. This principle holds that one level of government cannot tax another; thus, local governments cannot impose taxes on federally contracted services or income derived from them because they are instruments or means by which the federal government performs its functions.

In the dissenting opinion for Dobbins v. Los Angeles, Justice Harlan argued that the majority's decision was a misinterpretation of both constitutional law and precedent. He contended that the city of Los Angeles had no right to seize or destroy property without due process, even if it was deemed a public nuisance. Furthermore, he disagreed with the majority's assertion that billboards constituted such a nuisance in all cases; rather, he believed this should be determined on an individual basis through proper legal channels. In his view, allowing municipalities to arbitrarily decide what constitutes a nuisance could lead to abuses of power and violations of citizens' rights under the Fourteenth Amendment. Therefore, he concluded that Mr. Dobbins’ billboard did not necessarily constitute as an unlawful obstruction simply because it stood near public highways or streets unless proven so by court proceedings.