The U.S. Supreme Court case St. Louis, Brownsville & Mexico Ry. Co., et al v. Brownsville Navigation District, et al in 1937 revolved around a dispute over the right to levy taxes on railway properties located within the boundaries of a navigation district in Texas. The railroad companies argued that they were exempt from these taxes under state law because their properties did not benefit directly from improvements made by the navigation district and thus should not be subject to taxation for those improvements. However, the court ruled against them stating that even if there was no direct benefit received by railroads due to navigational improvements, it does not necessarily mean they are immune from paying tax levies for such enhancements as long as they are within the jurisdiction of said taxing authority (the navigation district). Therefore, this ruling upheld that local governments have broad powers when it comes to property taxation.

In the dissenting opinion for the case of St. Louis, Brownsville & Mexico Ry. Co. et al v. Brownsville Navigation District et al., Justice McReynolds disagreed with the majority's decision to uphold a Texas law that allowed local navigation districts to levy taxes on railroad companies for harbor improvements and maintenance costs in coastal areas where they operated but did not own property or facilities directly benefiting from such improvements. He argued that this taxation was unconstitutional as it violated due process rights by imposing an unfair burden on interstate commerce entities like railway companies who were being taxed without receiving direct benefits from these public works projects, thereby violating principles of fairness and equity inherent in tax laws under the U.S Constitution’s Fourteenth Amendment.