In the case of Covington v. First National Bank of Covington in 1904, the U.S. Supreme Court was asked to consider whether a national bank could be sued under state law for usury (charging excessively high interest rates). The plaintiff, Mrs. Covington, had borrowed money from the defendant bank and later claimed that she had been charged an illegal rate of interest according to Kentucky state law. However, federal banking laws allowed national banks to charge up to 7% interest on loans regardless of individual state laws prohibiting such rates. The court ruled in favor of the First National Bank stating that as a federally chartered institution it was not subject to Kentucky's usury laws but rather governed by federal regulations which permitted higher rates than those stipulated by Kentucky State Law at that time. This decision reinforced the principle that federal law supersedes conflicting state legislation when dealing with nationally regulated entities or matters falling within its jurisdictional purview thereby affirming supremacy clause principles enshrined in Article VI Clause 2 of United States Constitution.

The dissenting opinion in the Covington v. First National Bank of Covington case disagreed with the majority's view that a national bank could be sued outside its home state, arguing this interpretation was inconsistent with federal law and previous court decisions. The dissent emphasized that Congress intended to limit suits against national banks to their home states when it passed the National Bank Act. It also pointed out that allowing suits in other jurisdictions would subject these institutions to varying local laws and regulations, potentially undermining uniformity across the banking system - a key goal of federal legislation governing national banks. Furthermore, they argued that prior Supreme Court rulings had consistently upheld restrictions on where such lawsuits could be filed, reinforcing their belief that this case should have been dismissed for lack of jurisdiction.