In the case of Southern Railway Company v. Watts and Watts, as Commissioner of Revenue et al., 1922, the Supreme Court ruled on a dispute regarding taxation between a railway company and the state of North Carolina. The Southern Railway Company argued that it was being unfairly taxed by North Carolina's revenue commissioner because its property in other states wasn't taken into account when determining its tax liability within North Carolina. The court sided with the railway company, ruling that interstate commerce should not be subjected to discriminatory taxes from individual states. This decision reinforced principles established under both federal law and previous Supreme Court rulings which protected interstate businesses from unfair or burdensome taxation practices by individual states.

In the dissenting opinion for Southern Railway Company v. Watts and Watts, Justice Holmes argued that the state of North Carolina had a right to tax the railway company's property within its borders. He disagreed with the majority's view that interstate commerce was being unduly burdened by such taxation, stating that it is not an interference but rather a necessary condition of maintaining social order. Holmes asserted that every business operating in any given location should contribute towards supporting local services like police protection or fire departments through taxes. Furthermore, he contended there was no constitutional principle preventing states from taxing businesses based on their total value as long as they are fairly apportioned according to property located within each respective state’s jurisdiction.