In the case of Williams et al. v. Riley, State Controller of California (1929), the U.S Supreme Court ruled in favor of plaintiffs who were shareholders in a dissolved corporation and had paid taxes under protest to California's state controller. The court held that the tax imposed by California on dividends received from an insurance company was unconstitutional as it violated both due process and equal protection clauses of the Fourteenth Amendment. The court reasoned that since these dividends were derived from investments made outside California, they could not be subjected to taxation within its jurisdiction without violating constitutional principles. Furthermore, treating such out-of-state income differently than similar income earned within state borders constituted discrimination against interstate commerce which is prohibited by federal law.

In the dissenting opinion for Williams et al. v. Riley, State Controller of California, Justice Stone argued that the majority's decision was inconsistent with previous rulings and constitutional principles regarding interstate commerce regulation. He contended that by allowing California to impose a tax on an out-of-state corporation for using its trademarks within the state, it effectively permitted states to regulate and burden interstate commerce in violation of federal law. Furthermore, he believed this ruling could potentially lead to multiple taxation scenarios where corporations are taxed in every state they operate in - a situation which would be detrimental to national economic unity and efficiency. In his view, such matters should fall under federal jurisdiction rather than being subject to individual state laws.