In the 1916 case of Seton Hall College v. Village of South Orange et al., the U.S Supreme Court ruled in favor of Seton Hall College, a Catholic institution located in New Jersey. The college had been taxed by the village despite its status as an educational and religious entity, which should have exempted it from taxation under state law. However, local authorities argued that since part of the property was used for residential purposes (housing for faculty), it could be subjected to taxes. The court disagreed with this argument and held that even though some parts were used residually, they still served an essential function to further education and thus maintained their tax-exempt status. This ruling reinforced protections for non-profit institutions using properties primarily for educational or religious purposes against being unfairly taxed.

In the dissenting opinion for SETON HALL COLLEGE v. VILLAGE OF SOUTH ORANGE et al., Justice Holmes disagreed with the majority's decision that Seton Hall College, a Catholic institution, was not exempt from taxation under New Jersey law. He argued that the college should be considered a place of public worship and thus qualify for tax exemption. The justice contended that religious instruction is an integral part of education at such institutions and therefore they serve as places where religion is practiced regularly. Furthermore, he pointed out inconsistencies in how different states interpret what constitutes 'public worship,' leading to unequal treatment of similar institutions across jurisdictions. In his view, this case highlighted the need for clearer guidelines on what qualifies as public worship to ensure fair application of tax laws.