In the case of Waterman v. The Canal-Louisiana Bank and Trust Company, Executor in 1909, the U.S Supreme Court was tasked with determining whether a will that had been probated in Louisiana could be contested in Illinois. Mr. Waterman's wife had passed away and left her estate to their children under Louisiana law; however, Mr. Waterman believed he was entitled to half of his wife's property as per Illinois law where they were domiciled for most of their married life before moving to Louisiana shortly before her death. The court ruled against Mr.Waterman stating that since Mrs.Waterman died while being a resident of Louisiana and her will was probated there, it is subject only to the laws of that state regardless if she lived elsewhere during part or even majority portion of her life.

In the dissenting opinion for Waterman v. The Canal-Louisiana Bank and Trust Company, 1909, Justice Harlan argued that the majority's decision to uphold Louisiana's inheritance tax law was inconsistent with previous rulings of the Court. He contended that this ruling effectively allowed states to impose taxes on federal bonds, which he believed violated principles of federalism by infringing upon federal authority. Furthermore, he disagreed with the majority’s interpretation of constitutional provisions regarding taxation and interstate commerce. According to him, a state cannot levy an inheritance tax on property located outside its jurisdiction without violating due process rights under Fourteenth Amendment as it would amount to extraterritorial application of state laws.