In the 1941 case of Lubetich, doing business as Pacific Refrigerated Motor Line v. United States et al., the U.S Supreme Court ruled in favor of the government. The case involved a dispute over whether or not Mr. Lubetich was required to pay taxes on his income derived from transporting goods between states under Section 3475(a) of the Internal Revenue Code. This section imposed tax on carriers who transported property for hire across state lines and had gross receipts exceeding $5,000 annually. Mr.Lubetich argued that he should be exempted from this tax because he only acted as an agent for other companies rather than operating his own independent transportation business; therefore, he claimed that these earnings were not part of his gross income but belonged to those companies instead. The court disagreed with this argument stating that regardless if Mr.Lubetich was acting independently or as an agent for others, it did not change the fact that he earned money by providing interstate transport services which is taxable under Section 3475(a). Therefore, they upheld lower courts' decisions requiring him to pay federal taxes on these earnings.

In the dissenting opinion for Lubetich v. United States, Justice Frank Murphy argued that the majority's decision was a misinterpretation of the Motor Carrier Act. He contended that Congress intended to regulate only those motor carriers whose operations directly affected interstate commerce and not those who merely participated in it indirectly. In this case, he believed that Lubetich’s business did not have a direct impact on interstate commerce as his trucks were used primarily for intrastate transportation of goods from warehouses to railroads or ships within Washington State. Therefore, according to him, subjecting Lubetich’s business under federal regulation was beyond Congressional intent and an overreach by Interstate Commerce Commission (ICC). Furthermore, he emphasized that such broad interpretation could potentially bring every local commercial activity under federal control which would undermine state sovereignty and disrupt balance between state-federal powers.