In the case of Louisville Water Company v. Kentucky in 1897, the Supreme Court ruled on a dispute involving taxation and property rights. The state of Kentucky had imposed taxes on the Louisville Water Company's waterworks system, which included both tangible properties like buildings and machinery as well as intangible assets such as franchise rights to operate within certain areas. The company argued that this was unconstitutional because it violated their contract with the city of Louisville, which they claimed exempted them from any further taxation beyond what was stipulated in their original agreement. The court sided with Kentucky, ruling that states have broad powers to tax businesses operating within their borders unless explicitly prohibited by law or contract terms. They found no evidence that the company's charter protected them from additional taxes imposed by state law after its inception date. Furthermore, they held that even if such an exemption existed for tangible property (which wasn't clear), it wouldn't necessarily apply to intangible assets like franchise rights. This decision affirmed states' authority over local business operations and clarified how contracts between private companies and municipalities interact with broader state laws regarding taxation.

In the dissenting opinion for Louisville Water Company v. Kentucky, it was argued that the state of Kentucky had no right to tax a corporation created by another state and doing business within its borders. The dissenting justices believed that this taxation violated the Constitution's Commerce Clause, which prohibits states from passing laws that interfere with interstate commerce. They also contended that such taxes were discriminatory against out-of-state businesses and could potentially lead to economic protectionism if each state started taxing corporations from other states at higher rates than their own domestic companies. Furthermore, they asserted that allowing individual states to levy taxes on foreign corporations would create an inconsistent patchwork of regulations across different jurisdictions, making it difficult for businesses to operate nationally or internationally.