Hudson and Smith v. Guestier was a case heard by the United States Supreme Court in 1810. The plaintiffs, Hudson and Smith, were merchants from Philadelphia who had sold goods to Guestier of Baltimore on credit. When Guestier failed to pay for the goods as agreed upon, Hudson and Smith sued him for breach of contract in Pennsylvania state court. However, before they could obtain judgment against him there, he removed the suit into federal circuit court based on diversity jurisdiction because he was a citizen of Maryland while both plaintiffs were citizens of Pennsylvania. In this appeal to the Supreme Court, Hudson and Smith argued that removal was improper since their claim did not exceed $500 (the amount required at that time). The Supreme Court ultimately held that removal was proper because it would be unjust if either party should be deprived “of his right” due to an error or mistake regarding value; thus allowing them access to justice through federal courts even though their claim did not meet jurisdictional requirements set forth by Congress at that time.

In Hudson and Smith v. Guestier, the Supreme Court was asked to decide whether a contract between two parties should be enforced even though it had been made in violation of an act of Congress. The majority opinion held that the contract could not be enforced because it violated public policy as expressed by Congress. However, Justice Story dissented from this decision on the grounds that there was no clear evidence that Congress intended for its act to apply retroactively or to contracts already entered into before its passage. He argued that if such were the case then any prior contractual obligations would become void and unenforceable which would lead to great uncertainty in commercial transactions and cause immense hardship for those who relied upon them. Furthermore, he noted that while acts of Congress are binding on all citizens they must also be interpreted according to their plain meaning rather than being applied broadly without consideration for existing circumstances or agreements already made in good faith before their enactment.