The United States brought a case against the Minnesota and Northwestern Railroad Company in which they argued that the company had failed to pay taxes on certain lands it owned. The Supreme Court found for the United States, ruling that when Congress granted land to states or private corporations, those entities were subject to taxation by federal law. This decision established an important precedent regarding taxation of public lands and clarified how state governments could exercise their authority over such properties. It also affirmed Congress' power to impose taxes on property held by states or private companies even if it was not explicitly stated in legislation granting them ownership of said property.

In this case, the United States argued that it had a right to tax certain lands owned by the Minnesota and Northwestern Railroad Company. The Supreme Court disagreed with this argument, finding that such taxation would be unconstitutional because it violated the Contract Clause of the Constitution. The dissenting opinion argued that Congress has broad authority under its power to regulate commerce and should have been allowed to impose taxes on these lands in order to raise revenue for public purposes. Furthermore, they argued that since there was no contract between Congress and Minnesota & Northwestern Railroad Co., any taxation imposed would not violate the Contract Clause as it did not interfere with an existing agreement between two parties. Ultimately, however, their dissent was overruled by a majority decision which held that such taxation was unconstitutional due to its violation of the Contract Clause.