In the case of United States et al. v. Lowden et al., Trustees of the Estate of the Chicago, Rock Island & Pacific Railway Co., Etc., 1939, the U.S Supreme Court was tasked with deciding whether a railroad company in receivership could be compelled to pay higher rates for transporting mail as set by an order from Congress or if it should continue paying at lower contractually agreed upon rates. The court ruled that while under normal circumstances, private contracts are not subject to alteration by legislation without violating constitutional protections against impairment of contractual obligations; however, when dealing with government contracts such as this one involving postal services - a function reserved exclusively for Congress - legislative power can supersede existing agreements. Therefore, despite any prior agreement on transportation fees between parties involved (the railway and post office), congressional authority prevailed allowing them to impose higher charges.

In the dissenting opinion for United States v. Lowden, Justice Black argued that the majority's decision to allow a railroad company to avoid paying taxes during bankruptcy proceedings was not in line with the intent of Congress when it passed relevant legislation. He believed that Congress intended for railroads undergoing reorganization under Section 77 of the Bankruptcy Act to continue meeting their tax obligations as part of maintaining normal business operations. The majority's interpretation, he contended, would result in an unfair burden on taxpayers who would have to make up for lost revenue and could potentially lead other bankrupt companies seeking similar exemptions from taxation. Furthermore, he disagreed with the notion that courts had inherent equitable powers allowing them such discretion over tax matters; rather these should be determined by legislative action.