In the case of Grogan, Collector of Internal Revenue for the First District of Michigan, et al. v. Hiram Walker & Sons, Ltd., 1921, the Supreme Court was asked to decide on a tax dispute between Hiram Walker & Sons and the U.S government. The company had been assessed with additional taxes by an internal revenue collector due to their interpretation that certain transactions were sales rather than consignments as claimed by Hiram Walker & Sons. The company paid under protest and sued for recovery in federal court arguing that they were not liable for these extra taxes because they did not actually sell any goods but merely transferred them from one warehouse to another without changing ownership or possession which does not constitute a taxable event under existing laws at that time. The lower courts ruled in favor of Hiram Walker & Sons but upon appeal by Grogan representing IRS ,the Supreme Court reversed this decision stating that it is within Congress's power to impose such taxes regardless if there was no change in ownership or possession during transfer since it still constitutes partaking in business activities subjecting them to taxation.

In the dissenting opinion for Grogan v. Hiram Walker & Sons, Ltd., Justice McReynolds argued that the majority's interpretation of Section 25(a) of the Trading with The Enemy Act was incorrect. He believed that this section did not give power to Congress to tax income from property seized during World War I under the Alien Property Custodian Act. According to him, such taxation would be a violation of due process rights as it essentially amounted to taking private property without just compensation or due process of law. Furthermore, he contended that if Congress had intended for such an extraordinary exercise of power, they would have explicitly stated so in clear and unambiguous terms within the legislation itself.