In the case of Texas et al. v. Donoghue, Trustee (1937), the U.S Supreme Court was tasked with determining whether a state could tax federal securities held by a resident of that state in his capacity as trustee for non-resident beneficiaries. The court ruled against Texas, stating that such taxation would interfere with the borrowing power of the United States and thus violate constitutional principles regarding intergovernmental immunity from taxation. This decision reinforced previous rulings which established that states cannot directly tax federal instruments or activities without consent from Congress.

In the dissenting opinion for Texas et al. v. Donoghue, Trustee (1937), it was argued that the majority's decision to allow a state tax on interstate commerce conflicted with established precedent and threatened free trade among states. The dissenting justices believed that this ruling would open the door for individual states to impose burdensome taxes on out-of-state businesses, thereby disrupting national unity in economic matters and undermining federal authority over interstate commerce as granted by the Constitution. They contended that such taxation should be left solely under federal jurisdiction to avoid potential conflicts between states and maintain uniformity in commercial regulations across state lines.