In the 1893 case of Mobile and Ohio Railroad Company v. Tennessee, the U.S. Supreme Court ruled in favor of the state of Tennessee, upholding its right to tax railroads operating within its borders. The railroad company had argued that a provision in their charter exempted them from such taxation by stating they were only liable for taxes on real estate property and not personal property (which included rolling stock). However, the court found that this exemption was not explicitly stated in their charter but rather inferred by omission. Therefore, it did not protect them from changes to state tax laws which now required all corporations to pay taxes on both real and personal properties used or held for corporate purposes within Tennessee's jurisdiction.

In the dissenting opinion for Mobile and Ohio Railroad Company v. Tennessee, it was argued that the tax imposed by Tennessee on the railroad company's gross receipts from interstate commerce did not violate the Commerce Clause of the U.S. Constitution. The dissenting justices believed that this type of taxation should be considered as a means for states to share in revenues generated within their borders, rather than an unconstitutional regulation or burden on interstate commerce. They contended that such taxes were necessary for state governments to function effectively and provide essential services like maintaining roads and ensuring public safety - all things which benefit businesses operating within their jurisdiction including those involved in interstate commerce like railroads. Furthermore, they pointed out that if every form of state taxation touching upon interstate business operations were deemed unconstitutional under Commerce Clause grounds, it would severely limit states' abilities to raise revenue and carry out their responsibilities.