In Union Pacific Railroad Company v. United States, the Supreme Court was asked to decide whether the Union Pacific Railroad Company was liable for the payment of taxes on the interest it received from the United States government. The Union Pacific Railroad Company had been granted a loan from the United States government in order to build a transcontinental railroad. The loan was secured by a mortgage on the railroad's property. The Union Pacific Railroad Company argued that the interest it received from the United States government was exempt from taxation under the terms of the loan agreement. The Supreme Court held that the Union Pacific Railroad Company was liable for the payment of taxes on the interest it received from the United States government. The Court reasoned that the loan agreement did not exempt the interest from taxation, and that the Union Pacific Railroad Company was not entitled to any special treatment. The Court also noted that the Union Pacific Railroad Company had received a substantial benefit from the loan, and that it was therefore obligated to pay taxes on the interest it received.

In the case of Union Pacific Railroad Company v. United States, Justice Field delivered a dissenting opinion in which he argued that the majority's decision was incorrect and should be reversed. He maintained that Congress had not intended to limit its power over railroads when it passed legislation granting them subsidies for construction purposes. Instead, he argued, Congress had intended to give itself broad authority over such matters as rates and other regulations affecting interstate commerce by railroad companies. Furthermore, Justice Field contended that if the Court were to accept the majority's interpretation of Congressional intent then any state laws regulating railroads would be rendered invalid because they would conflict with federal law on this matter. Finally, he concluded by noting that while states may have some control over local transportation issues within their own borders they do not possess exclusive jurisdiction when it comes to interstate commerce involving railroads since this is an area where both state and federal governments must work together in order for regulation efforts to succeed.