In the case of Mercantile Bank v. Tennessee, for the Use of Memphis (1895), the U.S Supreme Court addressed a dispute over tax payments between Mercantile Bank and the city of Memphis, Tennessee. The bank had issued bonds to finance its operations but argued that these were exempt from taxation under an 1869 state law which stated that any bonds issued by banks would not be taxed if they were used to pay off debts incurred during the Civil War. However, in 1873 another law was passed stating all property owned by corporations or individuals should be taxed equally. The court ruled in favor of Memphis, holding that while laws granting tax exemptions should generally be respected, such privileges could not continue indefinitely and must yield to changes in public policy as reflected through new legislation.

In the dissenting opinion for Mercantile Bank v. Tennessee, it was argued that the majority's decision to uphold a tax on bonds held by out-of-state banks violated principles of interstate commerce and federalism. The dissent contended that such taxation could potentially lead to retaliatory measures from other states, creating an unfavorable environment for business and investment across state lines. It also raised concerns about potential violations of due process rights as out-of-state bondholders were not given any say in the imposition or rate of this tax. Furthermore, they believed that this ruling contradicted previous court decisions which had established certain protections against discriminatory state taxation practices targeting non-residents' property interests within their borders.