In Clemenson v. Williams, the United States Supreme Court ruled that a state court had no jurisdiction to hear a case involving an alleged breach of contract between two citizens of different states. The plaintiff, who was from Pennsylvania, sued the defendant in Maryland for failing to pay him money he claimed was owed under their agreement. The defendant argued that because both parties were not residents of Maryland and since the contract did not involve any property located there, it should be heard by a federal court instead. In its decision, the Supreme Court agreed with this argument and held that only federal courts could decide cases where one party is from another state or country than those involved in the dispute. This ruling established an important precedent regarding diversity jurisdiction which still stands today: when two people from different states are involved in a legal dispute over something other than real estate or personal property within one particular state's borders then they must go before a federal court rather than trying to resolve it through local courts.

In Clementson v. Williams, the Supreme Court was asked to decide whether a state court had jurisdiction over a case involving two citizens of different states. The majority opinion held that it did not have such jurisdiction and dismissed the case. However, Justice Story dissented from this decision on the grounds that there were no constitutional provisions or laws prohibiting state courts from exercising their authority in cases between citizens of different states. He argued that if Congress had intended to limit such power they would have done so explicitly in either the Constitution or federal statutes; since they had not done so, he believed it should be left up to each individual state court's discretion as to how far its powers extended with respect to these types of cases. Furthermore, he noted that allowing for diversity jurisdiction could help protect individuals' rights by providing them access to justice when local prejudice might otherwise prevent them from obtaining fair treatment under local law.