In the case of Ex Parte The Public National Bank of New York, 1928, the U.S. Supreme Court was asked to determine whether a federal court had jurisdiction over a state bank that had been placed into receivership by state authorities. The bank argued that it should be allowed to proceed with its business under federal law and not be subject to state control. However, the Supreme Court ruled against the bank stating that when a national banking association is in liquidation or has been closed due to insolvency proceedings initiated by state officials, it loses its character as a federally chartered institution and becomes subject solely to applicable non-discriminatory laws of the State where it is located. Therefore, such an entity cannot invoke federal jurisdiction on grounds of being federally chartered nor can they seek relief from adverse rulings through writs issued by Federal courts.

In the dissenting opinion for Ex Parte The Public National Bank of New York, Justice Stone argued that the majority's decision was a departure from established principles. He contended that it was not within the jurisdiction of federal courts to issue writs of mandamus against state officials in order to control their performance of duties under state law. Furthermore, he disagreed with the majority's interpretation and application of Section 266, arguing that this section did not grant authority for such an action either. According to Justice Stone, if Congress had intended for federal courts to have such power over state officials' actions under state law through Section 266 or any other statute, they would have made it explicit in clear language. Therefore, he believed that issuing a writ against a public utility commission based on its alleged failure to comply with due process requirements exceeded judicial powers as defined by existing laws and precedent.