In the case of Northern Pacific Railroad Company v. Washington Territory ex rel. Dustin, 1891, the U.S Supreme Court ruled in favor of the Northern Pacific Railroad Company. The dispute arose when Washington Territory attempted to tax lands granted by Congress to the railroad company for constructing a railway line from Lake Superior to Puget Sound on America's West Coast. The court held that these lands were not taxable until they had been sold or otherwise disposed of by the railroad company because they remained federal property until such time as this occurred and therefore fell under federal jurisdiction rather than state jurisdiction. This decision upheld previous rulings which established that states could not impose taxes on federally owned land unless explicitly authorized by Congress.

In the dissenting opinion for Northern Pacific Railroad Company v. Washington Territory ex rel. Dustin, Justice Brewer argued that the majority's decision was based on a misinterpretation of the law and an overreach of judicial authority. He contended that Congress had clearly intended to grant land to railroad companies as part of its efforts to encourage westward expansion and economic development, not as a means of generating revenue through taxation. Therefore, he believed it was improper for the court to interpret this congressional intent in such a way as to impose taxes on these lands before they were sold or used by the railroads. Furthermore, he asserted that it was beyond the court's purview to decide whether or not these lands should be taxed at all; rather, this decision should have been left up to Congress itself.