In the 1925 case of Southern Electric Company v. Stoddard, Superintendent, the U.S Supreme Court was tasked with determining whether a state could impose taxes on an out-of-state corporation for its use of public highways to transport goods across state lines. The Southern Electric Company, based in Alabama but operating in Mississippi as well, argued that such taxation violated their rights under both the Commerce Clause and Fourteenth Amendment's Due Process Clause. However, the court ruled against them stating that states have a right to tax corporations for using their infrastructure if it is done so fairly and without discrimination towards interstate commerce. This decision affirmed states' authority to levy taxes on businesses operating within their borders even if they are headquartered elsewhere.

In the dissenting opinion for Southern Electric Company v. Stoddard, it was argued that the majority's decision to uphold a Mississippi statute requiring out-of-state corporations to pay a franchise tax based on their total capital stock, regardless of how much business they conducted within the state, violated both due process and equal protection clauses of the Fourteenth Amendment. The dissent contended that this taxation scheme unfairly burdened interstate commerce and discriminated against non-resident businesses by taxing them more heavily than resident ones. It also pointed out inconsistencies in applying such taxes across different industries or types of companies. Furthermore, it challenged whether states had jurisdiction over property located outside their borders for taxation purposes under federal law.