In the case of Louisville and Nashville Railroad Company v. Louisville, 1896, the U.S Supreme Court ruled in favor of the railroad company. The city of Louisville had imposed a tax on all freight transported within its limits by any railroad company operating there. The court held that this was an unconstitutional interference with interstate commerce as it effectively taxed goods moving across state lines via railroads. This decision reinforced federal supremacy over states in matters related to interstate commerce under the Commerce Clause of the Constitution.

In the dissenting opinion for Louisville and Nashville Railroad Company v. Louisville, it was argued that the city of Louisville had no right to impose taxes on interstate commerce activities carried out by the railroad company. The justice believed that such a tax would be an infringement upon federal powers as outlined in the Constitution, which grants Congress exclusive authority over interstate commerce. He contended that allowing local governments to levy taxes on these activities could lead to inconsistencies and conflicts between different jurisdictions, potentially disrupting trade across state lines. Furthermore, he expressed concern about potential abuses of power if cities were allowed to tax businesses based solely on their gross receipts from all sources without considering where or how those funds were generated.