In the case of Sullivan v. City of Shreveport in 1919, the United States Supreme Court ruled that a city ordinance which prohibited door-to-door sales without a permit was unconstitutional. The plaintiff, Sullivan, was an out-of-town merchant who had been arrested and fined for selling goods within Shreveport's city limits without obtaining a permit from the local authorities. He argued that this law violated his rights under both the Commerce Clause and Fourteenth Amendment of the U.S Constitution by discriminating against non-resident merchants like himself. The court agreed with Sullivan's argument, holding that while cities have broad powers to regulate businesses for public health and safety reasons, they cannot use these powers to unfairly burden interstate commerce or discriminate against non-residents. This ruling reinforced principles established in earlier cases such as Ward v Maryland (1870) where it held states could not impose discriminatory taxes on out-of-state traders; thus reinforcing free trade among states.

In the dissenting opinion for Sullivan v. City of Shreveport, Justice McReynolds disagreed with the majority's ruling that upheld a city ordinance prohibiting pool halls within two blocks of churches or schools. He argued that this law was an overreach of government power and violated property rights. According to him, there was no clear connection between maintaining public morals or protecting children from harm and banning pool halls near these locations. Furthermore, he contended that if such broad powers were granted to local governments, they could potentially regulate any business activity based on subjective moral judgments rather than objective evidence of harm to society or individuals. This would lead to arbitrary restrictions on private enterprise which is contrary to principles of liberty and justice enshrined in the Constitution.