In the case of Hamilton v. Kentucky Distilleries & Warehouse Company, 1919, the Supreme Court was asked to determine whether a tax on whiskey stored in bonded warehouses during Prohibition constituted an illegal taking under the Fifth Amendment. The Kentucky Distilleries & Warehouse Co., which had large quantities of whiskey aging in its warehouses when Prohibition began, argued that it was being unfairly taxed for property it could not legally sell or use. The government countered that the company still owned and controlled its stock and thus owed taxes on it. The court ruled in favor of Hamilton (the Collector), stating that while prohibition laws prevented sale or removal for consumption purposes, they did not prevent ownership rights over whiskey stocks held by distilling companies like KDWC. Therefore, these stocks were subject to taxation as per internal revenue laws even if their commercial value was diminished due to prohibition regulations.

In the dissenting opinion for Hamilton v. Kentucky Distilleries & Warehouse Company, Justice Oliver Wendell Holmes Jr. argued that the government had a right to seize and sell whiskey owned by the company in order to collect taxes owed during World War I. He believed that this action was justified under wartime powers granted by Congress, even though it violated peacetime laws protecting property rights. Holmes emphasized that extraordinary measures were necessary during times of war and should not be judged according to normal standards of legality or fairness. He also disagreed with the majority's interpretation of tax law, arguing that it failed to take into account changes made due to wartime conditions.