In the case of Nickel et al., as Trustees, &c., et al. v. Cole, as State Controller of the State of Nevada (1920), the U.S Supreme Court was asked to determine whether a Nevada tax law that imposed taxes on net proceeds from mines violated federal laws and constitutional provisions related to taxation and property rights. The plaintiffs were trustees for several mining companies who argued that this state tax interfered with their federally granted right to mine public lands without paying royalties or other charges beyond those specified in federal law. However, the court ruled against them stating that while Congress had indeed given miners certain privileges regarding public lands, it did not exempt them from general state taxation laws applicable to all businesses within a state's jurisdiction. Therefore, they upheld Nevada's right to impose such taxes on mining operations.

In the dissenting opinion for Nickel et al., AS TRUSTEES, &C., et al. v. Cole, AS STATE CONTROLLER OF THE STATE OF NEVADA, Justice McReynolds disagreed with the majority's decision that Nevada could tax a trust created by a California resident but administered in Nevada. He argued that this violated the Due Process Clause of the Fourteenth Amendment because it allowed states to impose taxes on property outside their jurisdiction. According to him, such taxation was not justified simply because some administrative activities related to the trust took place within Nevada's borders; rather he believed that only tangible property located within state boundaries should be subject to its taxing power.