In Evans v. Eaton, the Supreme Court of the United States held that a state court had jurisdiction to hear an action brought by a citizen of one state against another in which damages were sought for breach of contract. The plaintiff, Joseph Evans, was a resident and citizen of Pennsylvania who entered into a contract with John Eaton, Jr., who resided in Delaware at the time. Under this agreement, Evans agreed to deliver goods from Philadelphia to Wilmington on behalf of Eaton's father-in-law; however he failed to do so as promised and instead sold them elsewhere without his consent or knowledge. As such, Eaton sued him for breach of contract in Delaware State Court seeking damages for lost profits due to not receiving the goods as promised under their agreement. The Supreme Court ultimately held that it was within the power and authority granted by Article III Section 2 Clause 1 (the "diversity clause")of Constitution for states courts have jurisdiction over cases between citizens from different states when they involve matters arising out of contracts made between them while residing in separate states.

In Evans v. Eaton, the Supreme Court was tasked with determining whether a state court had jurisdiction over a case involving citizens of different states. The majority opinion held that the state court did not have jurisdiction because it violated Article III of the Constitution which grants exclusive federal judicial power to decide cases between citizens of different states. Justice Story dissented from this ruling and argued that while Congress has authority to regulate interstate disputes, they do not have exclusive authority in such matters as there is no express provision in the Constitution granting them such power. He further noted that if Congress were given exclusive authority then it would be an unconstitutional delegation of legislative powers since only courts can make decisions on legal issues and Congress cannot exercise judicial functions without violating separation-of-powers principles established by the Constitution. Story concluded his dissent by stating that he believed state courts should retain concurrent jurisdiction over cases between citizens of different states unless otherwise provided for by law or treaty made under Congressional authority