The U.S. Supreme Court case Seaboard Air Line Railway Co. v. Watson in 1932 revolved around the issue of whether a state could impose taxes on an interstate commerce company, specifically a railway company, for its operations within the state's boundaries without violating the Commerce Clause of the Constitution which gives Congress power to regulate interstate commerce. Seaboard Air Line Railway Company was taxed by Florida based on mileage operated within its borders and challenged this tax as unconstitutional interference with interstate commerce. The court ruled that while states cannot interfere with or burden interstate commerce directly, they can levy taxes or other charges against such businesses if these are fairly apportioned to their activities conducted within the state. In this case, it was found that Florida’s method of taxation did not discriminate against out-of-state entities nor did it place undue burdens upon them; hence it didn't violate any constitutional provisions regarding regulation of interstate trade. Therefore, Seaboard's challenge was rejected and Florida’s right to tax companies operating across its territory upheld.

In the dissenting opinion for Seaboard Air Line Railway Co. v. Watson, Justice McReynolds argued that the majority's decision to uphold a Florida statute requiring railroads to pay damages for livestock killed on their tracks was an unconstitutional violation of due process rights under the Fourteenth Amendment. He contended that this law unfairly shifted responsibility from farmers who failed to properly fence in their animals onto railway companies, which had no control over whether or not these animals wandered onto their tracks. Furthermore, he believed it was unreasonable and unjustifiable to hold railways liable without proof of negligence on their part while other businesses were not subjected to such stringent standards of liability. In his view, this arbitrary and discriminatory treatment violated principles of fairness inherent in due process protections.