In the 1906 case of St. Mary's Franco-American Petroleum Company v. West Virginia, the U.S Supreme Court ruled in favor of West Virginia, upholding its right to tax corporations operating within its borders. The plaintiff, a French corporation with operations in West Virginia, argued that it should not be subject to state taxes because it was incorporated under French law and had already paid taxes there. However, the court held that as long as a foreign corporation conducts business within a state’s boundaries and benefits from protections provided by that state (such as police protection or access to courts), it is liable for taxation just like any domestic company would be. This decision reinforced states' rights over their internal affairs and set an important precedent regarding corporate taxation.

The dissenting opinion in the case of St. Mary's Franco-American Petroleum Company v. West Virginia argued that the state had no right to tax oil and gas reserves as real estate property, because these resources are not owned until they have been extracted from the ground. The justices contended that such taxation was a violation of due process under the Fourteenth Amendment, as it amounted to taking private property without just compensation. They also pointed out inconsistencies in how different states treated oil and gas rights for taxation purposes, arguing this lack of uniformity further demonstrated its unfairness. Furthermore, they disagreed with majority’s view on considering unextracted minerals as part of land ownership; instead believing them to be separate entities only becoming personal property upon extraction.