In Farmers and Mechanics' Bank of Pennsylvania v. Smith, the Supreme Court ruled that a state court could not issue an injunction against a federal court's decision in order to prevent it from being enforced. The case began when the bank sued Smith for failing to pay back money he had borrowed from them. When Smith failed to appear in court, the jury found him guilty and ordered him to repay his debt plus interest. However, before this judgment could be enforced by the federal courts, Smith obtained an injunction from a state court preventing any action on behalf of the bank until further notice. The Supreme Court held that such injunctions were unconstitutional because they interfered with federal authority over cases involving citizens of different states or foreign countries - which was prohibited under Article III of the Constitution - as well as undermined Congress’s power “to ordain and establish” uniform laws governing bankruptcy proceedings throughout all states within its jurisdiction.

In Farmers and Mechanics' Bank of Pennsylvania v. Smith, the Supreme Court was asked to decide whether a state court had jurisdiction over a case involving citizens of different states. The majority opinion held that it did not, as such cases were under the exclusive jurisdiction of federal courts. However, Justice Story dissented from this decision on two grounds: firstly, he argued that there was no constitutional basis for denying state courts jurisdiction in such cases; secondly, he argued that Congress had never passed any law explicitly granting exclusive federal court authority over these matters. He concluded by noting that if Congress wanted to grant exclusive power to federal courts they should do so expressly rather than leaving it up to judicial interpretation.