In the case of Western Union Telegraph Company v. City of Richmond, 1911, the Supreme Court ruled in favor of Western Union Telegraph Company. The city had imposed a tax on all telegraph companies operating within its jurisdiction based on their gross receipts from both interstate and intrastate business operations. However, Western Union argued that this was unconstitutional as it interfered with interstate commerce which is under federal regulation according to the Commerce Clause of the U.S Constitution. The court agreed with Western Union's argument stating that while states have power to tax businesses for using local facilities or services provided by them, they cannot impose taxes on gross receipts derived from interstate commerce activities because such taxation would interfere with free trade among states and thus violate federal law. Therefore, any state-imposed tax must be apportioned between intrastate and interstate business operations so as not to burden or discriminate against interstate commerce. This ruling reinforced earlier decisions protecting federally regulated entities from undue state interference and established important precedents regarding how states can levy taxes without infringing upon federal authority over certain economic activities.

In the dissenting opinion for Western Union Telegraph Company v. City of Richmond, Justice Holmes disagreed with the majority's ruling that a city ordinance requiring telegraph companies to bury their wires underground was unconstitutional. He argued that such an ordinance did not violate due process rights as it was within the police power of states and municipalities to regulate businesses in order to protect public safety and welfare. Furthermore, he contended that there were no grounds for claiming unjust discrimination against interstate commerce since all telegraph companies operating within city limits were subject to this regulation equally. The cost associated with compliance should be considered part of doing business rather than an unfair burden imposed by local authorities.