In the case of Kane v. State of New Jersey, 1916, the U.S Supreme Court upheld a law in New Jersey that required out-of-state vehicles to pay an annual fee for using its roads. The plaintiff, Mr. Kane from Pennsylvania, argued that this was unconstitutional as it violated both the Commerce Clause and Equal Protection Clause by discriminating against non-residents and impeding interstate commerce. However, the court ruled in favor of New Jersey stating that states have a right to impose reasonable fees on out-of-state drivers for road maintenance costs since they contribute to wear and tear but do not pay local taxes used for upkeep like residents do. This decision set precedent allowing states to charge fees or require permits from nonresidents who use their highways without violating constitutional principles.

In the dissenting opinion for Kane v. State of New Jersey, Justice Oliver Wendell Holmes Jr., joined by Justice Charles Evans Hughes, argued that the fee imposed on out-of-state vehicles was a violation of the Commerce Clause. He reasoned that this fee was not merely a fair means to cover administrative costs but rather an unjust tax on interstate commerce. The majority's argument that it is permissible because it applies equally to in-state and out-of-state drivers did not convince him as he believed such fees disproportionately burdened those engaged in interstate travel or business activities. Furthermore, he contended that if every state adopted similar laws, it would severely impede free trade among states which contradicts the very essence of the Commerce Clause designed to prevent protectionist measures by individual states against each other.