Jefferson Branch Bank v. Skelly was a case heard by the United States Supreme Court in 1861. The dispute arose when Jefferson Branch Bank sued William Skelly for failing to pay back a loan he had taken out from the bank. At issue was whether or not the state of Kentucky could constitutionally pass laws that allowed debtors to discharge their debts through bankruptcy proceedings, which would effectively nullify any loans they had taken out with banks like Jefferson Branch Bank. In its ruling, the court held that such laws were constitutional and did not violate any federal law or regulation regarding contracts between individuals and corporations; thus, it affirmed Kentucky's right to allow debtors to use bankruptcy as an option for discharging their debts without penalty from creditors like Jefferson Branch Bank.

In Jefferson Branch Bank v. Skelly, the Supreme Court was asked to decide whether a state court had jurisdiction over an action brought by a citizen of another state against a bank located in the forum state. The majority held that it did not have such jurisdiction because there was no diversity of citizenship between the parties and therefore, federal courts were exclusive forums for such actions. Justice Grier dissented from this opinion on two grounds: first, he argued that under existing law at the time, states could exercise concurrent jurisdiction with federal courts; second, he noted that Congress had never expressly denied states their traditional power to adjudicate cases involving citizens of other states who are sued within its borders. He concluded his dissent by noting that if Congress intended to deny this right then they should do so explicitly rather than relying on judicial interpretation which would be contrary to established precedent and practice at common law.