In the case of Bank of America National Trust & Savings Association v. Parnell (1956), the U.S. Supreme Court addressed a dispute over property rights and mortgage payments between a bank and an individual, Mr. Parnell. The issue arose when Mr. Parnell defaulted on his mortgage payments, leading to foreclosure proceedings by the bank which held his mortgage note - Bank of America National Trust & Savings Association. The crux of this case was whether California's "one form of action" rule prevented federal courts from hearing cases involving foreclosures on California real estate properties or if it only applied to state courts in California. The court ruled that while states have authority over their own procedural rules, they cannot dictate how federal courts operate within their jurisdiction under Erie Railroad Co v Tompkins precedent (1938). Therefore, even though California law prohibited multiple lawsuits for debt collection related to one loan default incident ("one form of action" rule), this did not prevent federal courts from hearing such cases as long as there were diversity jurisdiction requirements met. This decision clarified that state laws do not limit Federal Courts' ability to hear certain types of cases based solely on those laws; instead, they must comply with broader principles established by Federal Law and Constitution.

In the dissenting opinion for Bank of America National Trust & Savings Association v. Parnell, Justice Frankfurter argued that the majority's decision was a departure from established principles governing federal jurisdiction. He contended that it is not within the purview of federal courts to decide on matters related to state law unless there is diversity in citizenship or a substantial question regarding federal law exists. In this case, he believed neither condition was met as both parties were California citizens and no significant issue concerning federal law arose. The dispute centered around whether certain transactions constituted usurious interest under California laws - an issue purely of state concern according to him. Therefore, he opined that it should have been resolved by state courts rather than being brought into a federal forum merely because one party happened to be federally chartered bank.