In the 1902 case of Tennessee v. Condon, the United States Supreme Court ruled on a dispute involving interstate commerce and state taxation. The State of Tennessee had imposed a tax on every drum sold by traveling salesmen within its borders, regardless of whether or not those drums were manufactured in-state or out-of-state. A South Carolina-based company challenged this law, arguing that it violated the Commerce Clause of the U.S. Constitution which gives Congress exclusive power to regulate trade between states. The Supreme Court agreed with the South Carolina company's argument and struck down Tennessee's law as unconstitutional interference with interstate commerce. The court held that while states have broad powers to levy taxes for revenue purposes, they cannot use their taxing authority in ways that discriminate against out-of-state businesses or unduly burden interstate commerce.

In the dissenting opinion for Tennessee v. Condon, 1902, it was argued that the state of Tennessee had a right to regulate its own internal affairs without federal interference. The dissenting justices believed that the Fourteenth Amendment did not give Congress unlimited power over states' rights and should be interpreted narrowly to only apply in cases where there is clear discrimination against out-of-state citizens. They contended that this case did not meet those criteria as it involved an intrastate business transaction between two residents of Tennessee. Therefore, they felt that applying federal law in this instance violated principles of federalism and encroached upon state sovereignty.