In the 1917 U.S. Supreme Court case Petersen et al., Legatees of Anderson, v. State of Iowa ex rel. The State Treasurer, et al., the court examined a dispute over inheritance tax law in Iowa. A resident of Denmark died and left his estate to relatives living in Denmark and America; however, he had property holdings within Iowa at the time of his death which were subject to state inheritance taxes under an existing statute that taxed non-resident estates if they included real or personal property located within the state's borders. The legatees (recipients) challenged this taxation as unconstitutional on grounds it violated treaty obligations between United States and Denmark by imposing discriminatory rates on Danish citizens compared to those applied for American citizens inheriting similar properties from their deceased relatives residing abroad. The Supreme Court ruled against them stating that while treaties are indeed supreme laws of land according to Constitution’s Article VI clause 2 (Supremacy Clause), there was no specific provision in US-Denmark Treaty preventing such differential treatment based on citizenship status for purposes of inheritance taxation; hence, no violation occurred here.

In the dissenting opinion for Petersen et al., Legatees of Anderson, v. State of Iowa ex rel. The State Treasurer, et al., Justice Oliver Wendell Holmes Jr. disagreed with the majority's ruling that a state could tax an inheritance from a nonresident decedent who owned bonds in corporations within that state at their death time. He argued this was unconstitutional as it violated due process rights under the Fourteenth Amendment by imposing taxes on property not within its jurisdictional reach and without providing any services or protections to such property owners during their lifetime. Holmes believed that states should only have taxing power over properties physically located within their boundaries and warned against potential abuses if states were allowed to extend taxation beyond these limits.