In Railroad Company v. Alabama, the United States Supreme Court was asked to decide whether a state could impose a tax on a railroad company that operated within its borders. The railroad company argued that the tax was unconstitutional because it violated the Commerce Clause of the United States Constitution. The Court held that the tax was constitutional because it was a valid exercise of the state's power to tax and regulate businesses within its borders. The Court also held that the tax did not violate the Commerce Clause because it was not discriminatory against interstate commerce. The Court reasoned that the tax was applied equally to all railroads operating within the state, regardless of whether they were engaged in interstate or intrastate commerce. The Court also noted that the tax was not excessive and did not place an undue burden on interstate commerce. As such, the Court held that the tax was constitutional and could be enforced.

In Railroad Company v. Alabama, the Supreme Court was asked to decide whether a state could tax railroad companies on their rolling stock and other property used in interstate commerce. The majority of the court held that such taxation was unconstitutional because it interfered with Congress's exclusive power over interstate commerce. Justice Field dissented from this opinion, arguing that states have an inherent right to impose taxes on any property within their borders regardless of its use in interstate commerce. He argued further that while Congress has certain powers under the Commerce Clause, those powers are limited by the Tenth Amendment which reserves all rights not expressly delegated to Congress for the states or people themselves. Thus he concluded that Alabama had every right to levy taxes upon railroad companies operating within its borders so long as they did not interfere with federal regulations concerning interstate commerce itself.