In the 1945 case of Reconstruction Finance Corporation et al. v. Denver & Rio Grande Western Railroad Co. et al., the U.S Supreme Court was tasked with deciding whether or not a federal agency, in this case, the Reconstruction Finance Corporation (RFC), had to pay state taxes on property it owned and leased to private companies for profit-making activities. The RFC argued that as a federal entity, it should be exempt from such taxation under the Supremacy Clause of the Constitution which states that Federal law is supreme over State law when there's conflict between them. The court ruled against RFC stating that while government entities are generally immune from state taxation, this immunity does not extend to commercial enterprises carried out by these entities within individual states. Therefore, even though RFC was a federally created corporation its business operations were subject to state tax laws because they were conducted within those respective states' jurisdictions.

In the dissenting opinion for the case of Reconstruction Finance Corporation v. Denver & Rio Grande Western Railroad Co., Justice Frankfurter argued that the majority's decision was inconsistent with previous rulings and principles established by Congress. He contended that it was not within the Court's jurisdiction to determine whether a loan from a government agency is prudent or beneficial, as this responsibility falls under legislative discretion. Furthermore, he disagreed with the majority’s interpretation of Section 210 of Transportation Act, stating that it does not grant courts authority to review loans made by federal agencies like RFC (Reconstruction Finance Corporation). Instead, he believed such decisions should be left to administrative bodies who have specialized knowledge in these areas. Lastly, he expressed concern over potential negative consequences on future governmental financial assistance programs due to this ruling.