In the case of Reconstruction Finance Corporation v. J.G. Menihan Corp et al., 1940, the U.S Supreme Court ruled in favor of the Reconstruction Finance Corporation (RFC). The dispute arose when RFC sold a ship to J.G. Menihan Corp under an installment contract that included a clause allowing RFC to repossess and resell it if payments were not made on time. When Menihan defaulted, RFC took back possession and later resold it for less than what was owed by Menihan. The court held that despite this shortfall, RFC could still recover from Menihan because their contractual agreement allowed them to do so even after repossession and resale of the vessel.

In the dissenting opinion for the case of RECONSTRUCTION FINANCE CORPORATION v. J. G. MENIHAN CORP., Justice Black argued that Congress did not intend to give corporations, such as Reconstruction Finance Corporation (RFC), immunity from state taxes when it created them under federal law. He believed that if Congress had intended this, they would have explicitly stated so in their legislation and since they didn't, RFC should be subject to New York's tax laws just like any other corporation operating within its borders. Furthermore, he pointed out that exempting federally-created corporations from state taxation could lead to an unfair economic advantage over other businesses and potentially disrupt local economies.