Dermott v. Wallach was a case heard before the United States Supreme Court in 1863. The dispute arose when William Dermott, a citizen of Virginia, sued John Wallach for breach of contract and fraud concerning an agreement to purchase land from him in Washington County, Maryland. Dermott alleged that he had paid $2,000 to Wallach as part of the agreement but that Wallach had failed to deliver title or possession of the property as promised. The court held that since both parties were citizens of different states at the time they entered into their contract, it fell under federal jurisdiction and should be decided by a jury according to state law where the property was located - Maryland in this case - rather than by equity courts which would have been applicable if only one party resided out-of-state at the time they made their agreement. This decision established precedent for cases involving contracts between citizens residing in different states being subject to federal jurisdiction and state laws governing such agreements instead of equity courts deciding them based on principles like fairness or justice alone.

In Dermott v. Wallach, the Supreme Court was asked to decide whether a state court had jurisdiction over an action brought by a citizen of one state against another in which the defendant resided in a different state. The majority opinion held that it did not have such jurisdiction and dismissed the case. However, Justice Field dissented from this decision and argued that states should be allowed to exercise their own laws when deciding cases between citizens of different states as long as they do not conflict with federal law or interfere with interstate commerce. He further noted that if Congress wanted to limit such authority then it could pass legislation doing so but until then, he believed states should be able to make decisions regarding matters within their borders without interference from other courts or governments.