This Supreme Court case involved the Louisville & Nashville Railroad Company and the Collector of Internal Revenue, Mr. Palmes. The Railroad Company argued that the tax imposed on them by the Collector was unconstitutional. The Collector had imposed a tax on the Railroad Company for the privilege of carrying on its business. The Railroad Company argued that the tax was a direct tax, and thus unconstitutional, as it was not apportioned among the states according to population. The Supreme Court held that the tax imposed by the Collector was not a direct tax, and thus was constitutional. The Court reasoned that the tax was not a direct tax because it was imposed on the Railroad Company for the privilege of carrying on its business, and not on the property of the Railroad Company. The Court further reasoned that the tax was not a direct tax because it was not imposed on the Railroad Company's property, but rather on the Railroad Company's privilege of carrying on its business. The Supreme Court thus held that the tax imposed by the Collector was constitutional, and that the Railroad Company was liable for the tax. The Court reasoned that the tax was not a direct tax, and thus was not subject to the constitutional requirement of apportionment among the states according to population.

Justice Field delivered the dissenting opinion in Louisville & Nashville Railroad Company v. Palmes, Collector. He argued that the tax imposed by Congress on railroad companies was unconstitutional because it violated Article I, Section 8 of the Constitution which states that taxes must be uniform throughout the United States and not discriminate against any state or class of citizens. Justice Field noted that this particular tax did not meet these requirements as it only applied to certain railroads located in certain states and thus discriminated against those railroads while favoring others who were exempt from taxation. Furthermore, he argued that since there was no clear indication from Congress as to why they chose to impose this specific tax on some but not all railroads, then it could be assumed they had done so for political reasons rather than economic ones; a violation of their constitutional duty under Article I, Section 8. Ultimately Justice Field concluded his dissent by stating his belief that if such an unequal and discriminatory law were allowed to stand then other similar laws would follow suit and lead to further inequality between different classes of people within our nation's borders - something which should never be tolerated under our system of government