In the case of Porter, Auditor v. Investors Syndicate in 1932, the U.S Supreme Court ruled that a state cannot tax securities held by an insurance company for the benefit of policyholders if those securities are not physically located within the state. The case arose when Minnesota attempted to impose a tax on Investors Syndicate, an insurance company incorporated in Canada but doing business in Minnesota. The company had purchased bonds and other securities with premiums paid by its policyholders and kept these assets outside of Minnesota. Despite this fact, Porter, as auditor for Minnesota's Department of Insurance sought to include these out-of-state assets in calculating Investor Syndicate’s total taxable property value within the state. However, Justice Benjamin Cardozo writing for majority held that such taxation was unconstitutional under Due Process Clause because it would amount to extraterritorial taxation which is impermissible under US constitution.

In the dissenting opinion for Porter v. Investors Syndicate, Justice McReynolds disagreed with the majority's interpretation of a Minnesota statute regarding insurance contracts. He argued that the law did not intend to provide policyholders with an absolute right to demand and receive payment in cash upon surrendering their policies before maturity. Instead, he believed it merely aimed to ensure that companies maintained sufficient reserves to meet obligations as they came due under normal circumstances. The justice also contended that interpreting this provision as creating such an unconditional right would lead to absurd results by allowing policyholders who had paid only a small portion of total premiums due on long-term contracts could demand full surrender values in cash at any time, potentially bankrupting insurers and harming other policyholders.