In the case of Reagan v. Mercantile Trust Company (1893), the U.S. Supreme Court was tasked with determining whether a Texas law that regulated railroad freight and passenger rates violated the Fourteenth Amendment's Due Process Clause. The state had established a Railroad Commission to set "reasonable" rates, but railroads argued this interfered with their property rights without due process of law. They also claimed it infringed upon interstate commerce regulations which were under federal jurisdiction, not state control. The Supreme Court ruled in favor of the railroads, finding that while states have power to regulate businesses within their borders for public welfare purposes, they cannot do so arbitrarily or unreasonably interfere with private property rights or contracts. Furthermore, any regulation affecting interstate commerce should be left to Congress as per Constitution’s Commerce Clause. This decision marked an important moment in American legal history as it affirmed corporations' constitutional protections against arbitrary rate regulation by states and emphasized federal supremacy over matters related to interstate commerce.

In the dissenting opinion for Reagan v. Mercantile Trust Company, it was argued that the majority's decision to allow a federal court to intervene in Texas' state affairs was an overreach of power. The dissenters believed that this case should have been left entirely within the jurisdiction of Texas courts and its legislature, as they were best equipped to handle matters related to their own internal policies and regulations. They contended that by allowing federal intervention in such cases, it could set a dangerous precedent where states' rights are undermined by federal authorities. Furthermore, they disagreed with the majority's interpretation of interstate commerce laws; arguing instead that these laws did not apply because railroads operating solely within one state do not constitute interstate commerce.