In the 1926 case of Dysart v. United States, the Supreme Court ruled on a matter involving federal income tax law and its application to an inheritance. The plaintiff, John F. Dysart, inherited his father's estate which included shares in several corporations that had accrued significant profits but not yet distributed them as dividends at the time of his father's death. After inheriting these stocks, Dysart received large dividend payments from these companies' accumulated earnings and was subsequently taxed by the federal government under income tax laws. Dysart challenged this taxation arguing that he should not be liable for taxes on these dividends because they were derived from profits earned prior to his inheritance of the stocks; thus they constituted part of his father’s estate rather than personal income. The Supreme Court disagreed with Dysart’s argument ruling against him unanimously (8-0). They held that regardless when those corporate earnings were made or accumulated, once they are paid out as dividends to a shareholder - even if through an inheritance - such funds become taxable personal income under U.S law.

In the dissenting opinion for Dysart v. United States, Justice Stone argued that the majority's interpretation of Section 35 of the Judicial Code was incorrect. He believed that this section should not be used to deny a plaintiff their right to sue in federal court if they have already lost a similar case in state court. Instead, he suggested that it should only apply when there is an ongoing lawsuit in another jurisdiction or when there has been a final judgment on all issues involved in both jurisdictions. According to him, denying plaintiffs access to federal courts simply because they had previously litigated related but distinct matters at state level would undermine their constitutional rights and violate principles of equity and justice.