In the 1894 case of New York, Lake Erie & Western Railroad Company v. Pennsylvania, the U.S. Supreme Court ruled in favor of Pennsylvania's right to tax corporations incorporated by other states but doing business within its borders. The railroad company argued that this taxation violated both the Commerce Clause and Equal Protection Clause of the Constitution as it was a corporation chartered by another state (New York). However, Justice John Marshall Harlan delivered an opinion for a unanimous court stating that there is no constitutional provision preventing a state from taxing property located within its jurisdiction even if owned by foreign corporations. Therefore, such taxes did not violate either clause mentioned above because they were levied on all companies operating railroads in Pennsylvania regardless of where they were incorporated.

In the dissenting opinion for New York, Lake Erie & Western Railroad Company v. Pennsylvania, Justice Brewer argued that the majority's decision was inconsistent with previous rulings and principles of interstate commerce. He contended that a state should not have jurisdiction over an accident occurring in another state simply because it involved one of its citizens or corporations. According to him, this would lead to states imposing their own laws on incidents happening outside their borders which contradicts the principle of territoriality - a fundamental aspect of law and sovereignty. Furthermore, he pointed out that if every state could impose penalties on foreign corporations for accidents occurring elsewhere involving its residents then there would be no limit to such impositions leading to potential chaos in legal proceedings across different jurisdictions.