In the case of Old Colony Trust Company v. City of Omaha, 1912, the U.S Supreme Court was tasked with determining whether a city had the right to tax bonds held by an out-of-state trust company. The Old Colony Trust Company, based in Massachusetts, held bonds for a waterworks company located in Omaha, Nebraska. The city attempted to levy taxes on these bonds and when they were not paid by either party (the waterworks or the trust), it sued both entities for payment. The central question before the court was whether this taxation violated due process rights under Fourteenth Amendment of Constitution as claimed by Old Colony Trust Company because it did not have any property within jurisdictional limits of Nebraska state law. The Supreme Court ruled in favor of City Of Omaha stating that since income derived from those properties is being enjoyed outside its jurisdiction; therefore taxing such income does not violate constitutional rights and falls within purview of legitimate exercise power by State.

In the dissenting opinion for Old Colony Trust Company v. City of Omaha, it was argued that the city had no right to tax property located outside its jurisdiction. The justice contended that a mortgage held by an entity within a state does not give that state authority to levy taxes on real estate situated in another state. He further asserted that such taxation is unconstitutional as it violates principles of territoriality and jurisdictional limits inherent in our federal system. This view emphasizes respect for states' rights and boundaries, suggesting any attempt by one state to extend its taxing power beyond its borders infringes upon the sovereignty of other states.