In the case of Norfolk & Western Railway Co. v. North Carolina ex rel. Maxwell, Commissioner of Revenue in 1935, the U.S Supreme Court ruled on a dispute regarding taxation and interstate commerce. The state of North Carolina had imposed a tax on railway companies operating within its borders based on their gross receipts from both intrastate and interstate operations. Norfolk & Western Railway Co., an out-of-state company with rail lines running through multiple states including North Carolina, challenged this tax as unconstitutional under the Commerce Clause which prohibits states from interfering with interstate commerce without congressional approval. The court sided with Norfolk & Western Railway Co., ruling that while states have broad powers to levy taxes for revenue purposes, they cannot do so in ways that discriminate against or unduly burden interstate commerce unless expressly authorized by Congress to do so. This decision reaffirmed previous rulings establishing limits on state taxation power over businesses engaged in both intra- and inter-state activities and further clarified how these principles apply to specific types of business operations such as railways.

In the dissenting opinion for Norfolk & Western Railway Co. v. North Carolina ex rel. Maxwell, Commissioner of Revenue, it was argued that the state's taxation on a foreign corporation should be upheld as constitutional and not in violation of due process rights or interstate commerce regulations. The dissenting justices believed that the tax levied by North Carolina was fair and proportional to the business conducted within its borders by Norfolk & Western Railway Company, which is incorporated in Virginia but operates extensively in multiple states including North Carolina. They contended that this case did not represent an undue burden on interstate commerce nor an unjust application of state power over out-of-state entities because every company operating within a state must contribute towards public expenses through taxes regardless of where they are incorporated.