In the case of Houston and Texas Central Railroad Company v. Texas, 1899, the U.S Supreme Court ruled in favor of the state of Texas. The dispute arose when Houston and Texas Central Railroad Company refused to pay taxes on bonds issued by two counties in aid of its construction, arguing that they were exempt from taxation under a special act passed by the legislature. However, this exemption was later repealed by another legislative act which required all railroad companies to pay taxes on their property within the state's jurisdiction. The court held that there was no contract between the company and state guaranteeing tax exemption for these bonds; therefore, repealing such an exemption did not violate any constitutional rights or obligations as claimed by Houston & Texas Central Railroad Co., nor did it impair any contractual obligation protected under Article I Section 10 Clause 1 (the Contract Clause) of United States Constitution.

In the dissenting opinion for Houston and Texas Central Railroad Company v. Texas, Justice Harlan disagreed with the majority's decision that a state could regulate interstate commerce if it did not conflict with federal law. He argued that this interpretation was incorrect and potentially harmful to national unity because it allowed states to interfere in matters of interstate commerce which should be under exclusive federal control. Harlan believed that only Congress had the power to regulate such affairs, as stated explicitly in the Constitution. He feared that allowing individual states too much leeway would lead to inconsistencies and conflicts between different jurisdictions, undermining economic stability across state lines.