In the 1896 case of Scott v. Donald, the United States Supreme Court dealt with a dispute over state laws in South Carolina that regulated and monopolized liquor sales. The plaintiff, Scott, was an out-of-state liquor dealer who challenged these laws on grounds that they violated both the Interstate Commerce Clause and Equal Protection Clause of the U.S. Constitution by discriminating against non-residents. The court ruled in favor of Donald (representing South Carolina), upholding the constitutionality of state dispensary systems for alcohol distribution which gave states exclusive rights to sell alcohol within their borders while prohibiting importation from other states or countries unless it was intended for personal use. The ruling established that although commerce between states should generally be free from restrictions, there are exceptions when it comes to products like alcoholic beverages due to their potential impact on public health and safety. This decision reinforced states' power under what is known as "police powers" - allowing them to regulate certain activities within their jurisdiction for protecting public welfare.

In the dissenting opinion for Scott v. Donald, Justice Harlan argued that the South Carolina state law in question violated both the Equal Protection Clause and Commerce Clause of the Constitution. He contended that by imposing discriminatory taxes on out-of-state liquor dealers, South Carolina was effectively favoring its own state-run monopoly at their expense. This not only unfairly penalized non-residents but also infringed upon Congress's exclusive power to regulate interstate commerce. Furthermore, he believed this law deprived citizens of their right to engage freely in lawful trade under equal conditions and protections as guaranteed by Fourteenth Amendment. Thus, he disagreed with majority’s decision upholding such a protectionist policy which contradicted principles of free trade and equality before law.