In the case of Metropolitan Railroad Company v. District of Columbia in 1904, the U.S Supreme Court ruled on a dispute between a railroad company and Washington D.C.'s local government over tax assessments. The Metropolitan Railroad Company argued that it was unfairly taxed by the city for its street railway franchises, which were considered intangible property and thus not subject to taxation under existing laws. However, the court disagreed with this argument stating that while franchises are indeed intangible properties, they can still be assessed for taxation if they have been granted special privileges or rights by public authorities such as operating within city limits. Therefore, these franchise rights could be seen as real estate interests rather than mere contractual agreements between private parties. As a result of this ruling, the court upheld Washington D.C.'s right to tax these types of business entities based on their use and enjoyment of public resources.

In the dissenting opinion for Metropolitan Railroad Company v. District of Columbia, Justice Harlan disagreed with the majority's decision that a local ordinance could impose taxes on a federally chartered corporation without explicit congressional approval. He argued that such an interpretation was contrary to previous court decisions and undermined federal authority over corporations it created. According to him, Congress had exclusive legislative control over Washington D.C., so any tax imposed by the district should have been explicitly authorized by Congress itself. The justice believed this principle applied even if the company benefited from municipal improvements funded by those taxes because its charter did not expressly subject it to them. Therefore, he concluded that unless there is clear consent from Congress allowing such taxation, no state or municipality can levy taxes on entities created under federal law.