In the case of Moore, Commissioner v. Fidelity & Deposit Company et al., 1926, the U.S Supreme Court was tasked with determining whether a state could impose an excise tax on foreign corporations for doing business within its borders. The court ruled that states have the right to levy such taxes as long as they do not interfere with interstate commerce or violate constitutional provisions regarding equal protection and due process. In this particular case, it was decided that Kentucky's imposition of an annual franchise tax on foreign surety companies did not infrive upon these rights and thus upheld its constitutionality.

In the dissenting opinion for Moore v. Fidelity & Deposit Company, Justice Holmes argued that the majority's decision to uphold a state law requiring surety companies to deposit securities with the State Treasurer was incorrect. He contended that this requirement violated due process rights under the Fourteenth Amendment by depriving these companies of their property without just compensation. Furthermore, he disagreed with the majority's assertion that such deposits were necessary for public protection and instead viewed them as an arbitrary exercise of power by the state government. In his view, if states could require such deposits from surety companies, they could also impose similar requirements on other types of businesses which would be equally unconstitutional.