In the 1934 case Penn General Casualty Co. v. Pennsylvania ex rel. Schnader, Attorney General, the U.S Supreme Court ruled in favor of Pennsylvania's right to regulate and tax foreign corporations operating within its borders. The Penn General Casualty Company, a Maryland corporation doing business in Pennsylvania, challenged an annual state tax on foreign corporations arguing it violated the Due Process Clause of the Fourteenth Amendment and was discriminatory against out-of-state businesses under the Commerce Clause of Constitution. However, Justice Benjamin Cardozo writing for majority held that states have authority to impose taxes on foreign companies as long as they are not discriminatory or arbitrary; further noting that such taxation does not interfere with interstate commerce nor violate due process rights since these companies benefit from protections provided by host state’s government services.

In the dissenting opinion for Penn General Casualty Co. v. Pennsylvania ex rel. Schnader, Justice Cardozo disagreed with the majority's decision that a state could regulate insurance rates without violating due process rights of insurers under the Fourteenth Amendment. He argued that while states have broad powers to regulate businesses in public interest, these regulations must not be arbitrary or unreasonable and should respect constitutional limitations on property rights and personal liberty. In this case, he believed that Pennsylvania’s rate-setting scheme was too rigid and did not provide sufficient opportunity for insurers to challenge proposed rates before they were implemented - thus infringing upon their right to due process as it didn't allow them an adequate hearing before depriving them of their property (profits). Furthermore, he contended that such regulation could potentially lead to confiscatory results if companies are forced into insolvency by unreasonably low rates set by the state.