In the case of United States v. National Exchange Bank of Baltimore, 1925, the Supreme Court was tasked with determining whether a national bank could be sued in a federal court by an out-of-state plaintiff under diversity jurisdiction. The National Exchange Bank of Baltimore had argued that it should not be subject to such suits as it is considered a citizen only in its home state for purposes of diversity jurisdiction. However, the Supreme Court ruled against this argument and held that national banks are indeed citizens both in their home states and also where they have been incorporated or have their principal place of business. This decision thus expanded potential venues for lawsuits involving national banks and clarified aspects related to citizenship status within federal courts' diversity jurisdiction.

In the dissenting opinion for United States v. National Exchange Bank of Baltimore, Justice Oliver Wendell Holmes Jr. argued that the majority's decision was inconsistent with previous rulings and principles of law regarding taxation. He disagreed with their interpretation of a statute exempting certain types of bonds from federal income tax, arguing that it should not apply to interest on loans made by banks using those bonds as security. In his view, this would be an overly broad application of the exemption which could lead to significant loss in revenue for the government without clear legislative intent or justification. Furthermore, he contended that such an interpretation could potentially create unfair advantages for certain financial institutions over others based on how they structure their transactions and investments.