In the case of N. & G. Taylor Company, Inc., v. Anderson et al., 1927, the U.S Supreme Court was tasked with determining whether a state could impose an income tax on a foreign corporation for business conducted within its borders without violating the Due Process Clause of the Fourteenth Amendment. The plaintiff, N.&G Taylor Co., argued that it did not have sufficient presence in Alabama to warrant taxation by that state as it only had salesmen operating there and no physical property or offices. However, Alabama contended that since these salesmen were conducting business and generating profit from within their jurisdiction they had every right to levy taxes on those profits. The court ruled in favor of Alabama stating that having representatives conduct regular business operations such as soliciting orders and making contracts constituted enough presence for taxation purposes under due process laws even if no physical assets were held in-state by said company.

In the dissenting opinion for N. & G. Taylor Company, Inc., v. Anderson et al., Justice Holmes argued that the majority's decision was based on an incorrect interpretation of the law and a misunderstanding of business practices at that time. He believed that there was no legal basis to hold a corporation liable for damages caused by its subsidiary company unless it could be proven that the parent company directly controlled or influenced those actions which led to harm. Furthermore, he contended that corporations were often structured with subsidiaries in order to limit liability and protect assets, which is a common and accepted practice within business operations. Therefore, he disagreed with imposing penalties on parent companies simply because they owned stock in another entity without considering their actual involvement or influence over harmful activities conducted by these entities.