In San Bernardino County v. Southern Pacific Railroad Company, the Supreme Court of the United States was asked to decide whether a county could tax a railroad company for the value of its land. The county argued that the railroad company was liable for the taxes because it owned the land, while the railroad company argued that it was exempt from taxation because it was a corporation created by the state. The Court held that the county could not tax the railroad company for the value of its land. The Court reasoned that the railroad company was a corporation created by the state and, as such, was exempt from taxation. The Court further reasoned that the state had the power to exempt the railroad company from taxation and that the county could not override the state's decision. The Court also held that the county could not tax the railroad company for the value of its land because the land was not owned by the railroad company. The Court reasoned that the land was owned by the state and that the railroad company was merely a tenant of the state. As such, the Court held that the county could not tax the railroad company for the value of the land. In conclusion, the Supreme Court held that the county could not tax the railroad company for the value of its land because the railroad company was a corporation created by the state and the land was owned by the state.

Justice Field delivered the dissenting opinion in San Bernardino County v. Southern Pacific Railroad Company, arguing that the majority's decision was contrary to both law and justice. He argued that a tax imposed by a state on property within its borders is not unconstitutional simply because it affects interstate commerce; rather, he asserted, such taxes are valid unless they discriminate against interstate commerce or interfere with federal authority over it. In this case, Justice Field found no evidence of discrimination or interference with federal power: California had merely sought to impose an ad valorem tax on all real estate within its jurisdiction regardless of whether it belonged to residents or nonresidents alike. Furthermore, he noted that Congress had never legislated any prohibition against taxation of railroad lands by states and thus there was no legal basis for finding the tax invalid under the Commerce Clause. Ultimately Justice Field concluded that while "the burden may be heavy," if California wished to levy taxes upon railroads operating within its boundaries then nothing in either constitutional law nor congressional legislation prevented them from doing so.