In the 1892 case of Lovell Manufacturing Company v. Cary, the United States Supreme Court ruled in favor of Lovell Manufacturing Company. The dispute arose when Cary, a tax collector for Erie County in Pennsylvania, attempted to collect taxes from Lovell on its entire capital stock value despite part of it being invested and used outside the state. The court held that taxing property located and employed exclusively outside a state's jurisdiction was unconstitutional as per Due Process Clause of Fourteenth Amendment. It stated that such taxation violated an individual’s right to be free from arbitrary governmental action by imposing burdensome taxes on out-of-state properties without providing any benefits or protections in return.

In the dissenting opinion for Lovell Manufacturing Company v. Cary, Justice Brewer argued that the majority's decision was inconsistent with previous rulings of the court and failed to consider important aspects of contract law. He contended that a party who has received benefits under a contract cannot refuse to fulfill their obligations simply because they later find them burdensome or inconvenient. In this case, he believed that Lovell had agreed to pay certain taxes as part of its lease agreement and could not now avoid those payments by claiming they were unconstitutional. Furthermore, he disagreed with the majority's interpretation of Pennsylvania tax laws and felt it was inappropriate for federal courts to interfere in state taxation matters without clear evidence of constitutional violations.