In Bayne v. Morris, the Supreme Court of the United States held that a state court cannot exercise jurisdiction over a case involving federal law or rights. The case arose when William Bayne sued John Morris in an Illinois state court for breach of contract related to land located in Wisconsin Territory. The defendant argued that since the dispute involved federal law and rights, it should be heard by a federal court instead of an Illinois state court. The Supreme Court agreed with this argument and ruled that only courts established under Article III of the Constitution—federal courts—have authority to hear cases involving questions arising under laws passed by Congress or treaties made between states and foreign nations. This ruling was significant because it affirmed the principle that disputes concerning matters within exclusive federal control must be decided by a tribunal created pursuant to Article III rather than one established under state law.

In Bayne v. Morris, the Supreme Court was asked to decide whether a state court had jurisdiction over a case involving an alleged breach of contract between two citizens of different states. The majority opinion held that the state court did not have jurisdiction because it would be in violation of the Constitution's Full Faith and Credit Clause, which requires each state to give full faith and credit to judgments rendered by other states' courts. Justice Field dissented from this decision on the grounds that Congress has exclusive authority under Article IV Section 1 of the Constitution to determine when one State must recognize another State's judicial proceedings. He argued that since Congress had not yet acted on this issue, it should be left up for interpretation by individual States until such time as Congress passes legislation regarding interstate recognition of judgments. Furthermore, he argued that even if there were some constitutional impediment preventing States from recognizing each other’s judgments without Congressional action, then any such impediment should only apply prospectively rather than retroactively so as not to interfere with existing contracts or rights already established prior thereto.