In the case of Provident Life & Trust Company v. Mercer County, 1897, the U.S Supreme Court ruled in favor of Provident Life & Trust Company. The dispute arose when Mercer County issued bonds to finance a railroad construction and later refused to pay them off on grounds that they were unconstitutional under Kentucky law. The court held that since the county had received benefits from the railroad, it was obligated to honor its debts regardless of any constitutional issues with how they were incurred. This decision reinforced principles of contract law and public debt obligations by ruling that once a municipality has benefited from borrowed funds, it cannot refuse repayment based on alleged unconstitutionality at issuance time.

In the dissenting opinion for Provident Life & Trust Company v. Mercer County, it was argued that the majority's decision to uphold a tax on bonds issued by out-of-state municipalities was inconsistent with previous rulings of the Court. The dissent pointed out that in earlier cases, such as State Railroad Tax Cases and Home Insurance Co. v. New York, taxes on property located outside of a state were deemed unconstitutional because they violated principles of interstate comity and federalism. Furthermore, it was contended that there is no meaningful difference between taxing an individual directly for owning out-of-state bonds and taxing them indirectly through their ownership interest in a corporation which owns such bonds - both forms of taxation are equally intrusive upon interstate commerce and should be prohibited under the Constitution's Commerce Clause.