In the case of Lusk et al., Receivers of St. Louis & San Francisco Railroad Company, v. Botkin, Secretary of State of Kansas (1915), the U.S Supreme Court ruled in favor of Lusk and others who were receivers for the St. Louis & San Francisco Railroad Company against J.T. Botkin, then Secretary of State for Kansas. The dispute arose when Botkin attempted to enforce a state law that required foreign corporations operating within Kansas to pay an annual tax based on their capital stock value before they could conduct business in the state; failure to do so would result in penalties including fines and imprisonment for corporate officers or agents conducting business without payment. The railroad company argued that as it was already under federal control due to bankruptcy proceedings at the time this law was enacted, it should be exempt from such taxation as per federal laws governing bankrupt entities which supersede state laws according to Supremacy Clause. The court agreed with this argument stating that since Congress had not explicitly given states permission to impose such taxes on federally controlled railroads undergoing bankruptcy proceedings, these companies were indeed exempt from them.

In the dissenting opinion for Lusk et al., Receivers of St. Louis & San Francisco Railroad Company, v. Botkin, Secretary of State of the State of Kansas (1915), Justice Holmes disagreed with the majority's decision that a state could not impose taxes on an interstate railroad company operating within its borders while under federal control due to bankruptcy proceedings. He argued that just because a business is in receivership does not mean it should be exempt from paying taxes like any other corporation or individual would have to do so under similar circumstances. Furthermore, he contended that such tax obligations did not interfere with federal jurisdiction over bankruptcy cases and were necessary for states to maintain their sovereignty and ability to fund public services.