In the case of Schuylkill Trust Co. v. Pennsylvania, 1937, the Supreme Court ruled on a dispute involving inheritance tax laws in Pennsylvania. The state had imposed an inheritance tax on property transferred by a resident decedent to a non-resident beneficiary through an out-of-state trust company acting as trustee. The plaintiff, Schuylkill Trust Company, argued that this was unconstitutional and violated due process rights under the Fourteenth Amendment because it taxed property outside of its jurisdictional reach. The Supreme Court disagreed with this argument and upheld the constitutionality of Pennsylvania's law. It found that while states cannot directly tax personal properties located outside their borders, they can impose taxes upon transfers occurring within their jurisdictions even if those transfers involve properties situated elsewhere. The court reasoned that since all operations connected with creating trusts were performed in Pennsylvania and involved residents at every stage except for final distribution to beneficiaries who happened to be non-residents; therefore it was not beyond its power or unfair for the state to levy such taxes.

In the dissenting opinion for Schuylkill Trust Co. v. Pennsylvania, Justice Benjamin Cardozo disagreed with the majority's ruling that a state tax on intangible property held by a resident trustee was unconstitutional due to violation of the Due Process Clause. He argued that there is no constitutional principle preventing states from taxing their residents' personal properties, regardless of where they are located or how they are used outside state borders. Furthermore, he contended that it is not an infringement upon interstate commerce as suggested by the majority but rather an exercise of power over individuals and their properties within its jurisdictional limits. The justice also emphasized his belief in upholding precedent set by previous cases which allowed such taxation practices unless proven to be arbitrary or discriminatory against interstate commerce.