In the 1919 case of Maxwell et al., Executors of McDonald, v. Bugbee, Comptroller of the Treasury of the State of New Jersey, et al., the U.S. Supreme Court dealt with a dispute over inheritance tax laws in New Jersey. The executors for Mr. McDonald's estate argued that certain bonds and mortgages held by him at his death were not subject to taxation under state law because they were located outside New Jersey where he was domiciled at his death time. However, according to existing legislation in New Jersey regarding transfer taxes on intangible personal property (such as bonds), these assets could be taxed regardless their location if owned by a resident decedent. The court ruled against Maxwell and others acting on behalf of McDonald’s estate stating that it is within states' rights to levy such taxes without violating due process clause or equal protection clause under Fourteenth Amendment even though physical presence is lacking since domicile provides sufficient basis for jurisdiction over intangibles.

In the dissenting opinion for Maxwell et al., Executors of McDonald, v. Bugbee, Comptroller of the Treasury of the State of New Jersey, et al., Justice McReynolds argued that a state does not have jurisdiction to tax property located outside its borders. He contended that such an action violates principles of interstate comity and federalism by imposing on another state's sovereignty over its territory and citizens. Furthermore, he disagreed with the majority's interpretation that a decedent's domicile at death determines where their personal property is located for taxation purposes. Instead, he believed this rule should only apply when there are no specific facts indicating otherwise - in this case, it was clear from evidence presented during trial proceedings that most assets were physically situated in New York rather than New Jersey where McDonald resided before his demise.