In the case of McDonnell v. Jordan, 1899, the US Supreme Court ruled on a dispute over land ownership in California. The plaintiff, McDonnell, claimed that he had purchased a plot of land from an individual who had obtained it through preemption rights under federal law. However, this was contested by Jordan who argued that she held title to the same property based on her purchase from another party with alleged Spanish and Mexican land grant claims predating California's statehood. The court found in favor of Jordan as they determined that her claim was valid due to its recognition by previous legal decisions and legislation which confirmed such titles following Mexico’s cession of California to the United States after the Mexican-American War (1846-48). Therefore, even though McDonnell's seller may have been granted preemption rights under later federal laws intended for settlers without existing valid claims; these could not supersede earlier established lawful private property rights like those recognized for holders of former Spanish/Mexican grants.

In the dissenting opinion for McDonnell v. Jordan, it was argued that the majority's decision to uphold a tax assessment on property held in trust by a non-resident of California violated both federal law and constitutional principles. The dissent contended that under federal law, only real estate could be taxed where it is located, while personal property should be taxed at the owner's domicile. In this case, since the trustee was domiciled outside of California, taxing him there constituted an unlawful extraterritorial application of state power. Furthermore, they believed this taxation infringed upon due process rights as guaranteed by Fourteenth Amendment because it denied equal protection to out-of-state trustees who were being unfairly targeted simply based on their residency status.