In the case of Tennessee v. Union and Planters' Bank (1893), the U.S Supreme Court ruled in favor of Union and Planters' Bank, deciding that a state cannot tax national banks more heavily than other types of property within its jurisdiction. The State of Tennessee had imposed a higher tax on shares held by shareholders in national banks compared to those held by shareholders in state-chartered corporations, which was challenged as being unconstitutional under Section 5219 of the Revised Statutes. This section stipulates that states may only impose taxes where "the taxation shall not be at a greater rate than is assessed upon other moneyed capital coming into competition with such associations". The court found this differential treatment violated federal law, thus affirming the principle that states must treat all forms of property equally when imposing taxes.

In the dissenting opinion for Tennessee v. Union and Planters' Bank, it was argued that the majority's decision failed to properly consider the nature of tax laws in relation to contracts. The dissent emphasized that a state has an inherent power to impose taxes, which cannot be contracted away or limited by private agreements. It was further contended that even if such a contract could limit taxation powers, this particular case did not involve such a contract as no explicit exemption from future taxation was provided for in the bank’s charter. Therefore, according to this view, Tennessee's imposition of additional taxes on banks should have been upheld as constitutional because it is within its sovereign rights and does not infringe upon any contractual obligations with these institutions.