In the case of Lewellyn, Collector v. Electric Reduction Company in 1927, the U.S Supreme Court ruled on a dispute regarding taxation. The Electric Reduction Company had been taxed by South Carolina under its income tax law for profits made from selling ferrophosphorus to companies outside of the state. However, it argued that this was unconstitutional as these transactions were part of interstate commerce and thus should be exempt from state taxes according to federal law. The court disagreed with this argument and upheld South Carolina's right to levy such taxes on corporations operating within its borders regardless if their sales are conducted out-of-state or not. It concluded that while states cannot interfere with interstate commerce directly through taxation or other means, they can still impose an income tax on businesses based within their jurisdiction even when those businesses' activities involve interstate trade.

In the dissenting opinion for Lewellyn v. Electric Reduction Company, Justice Stone argued that the majority's decision to uphold a tax exemption for ores and metals in transit was incorrect. He believed that this interpretation of the law could potentially lead to unfair taxation practices and create loopholes for certain industries or companies. Furthermore, he disagreed with their conclusion that these goods were not within South Carolina’s jurisdiction when they were being processed there temporarily before shipment out-of-state. In his view, just because an item is intended for export does not mean it should be exempt from state taxes while it is still physically present within the state's borders.