In the case of Martinez v. La Asociacion de Senoras Damas del Santo Asilo de Ponce, 1908, the U.S Supreme Court was tasked with determining whether a Puerto Rican charitable organization could be sued in federal court by a New York resident. The plaintiff, Martinez, had loaned money to the charity and sought repayment through legal action when they failed to return his funds. However, at that time Puerto Rico was considered an unincorporated territory of the United States and not a state or foreign nation; hence it fell outside of federal jurisdiction as defined by Article III Section 2 of the Constitution which only extends to controversies between states or citizens thereof and foreign nations or their citizens. Therefore, despite acknowledging that Martinez had been wronged financially by this charity based in Puerto Rico,the Supreme Court ruled against him because he did not have standing under existing law to sue them in federal court due its territorial status.

The dissenting opinion in the Martinez v. La Asociacion De Senoras Damas Del Santo Asilo De Ponce case argued that the Supreme Court did not have jurisdiction over this matter, as it was a dispute between private parties and did not involve any constitutional questions or federal law. The dissent also contended that even if there were grounds for federal jurisdiction, the majority's decision to reverse and remand the case back to Puerto Rico courts was incorrect because they failed to consider key aspects of local law regarding property rights and inheritance. They believed that under Puerto Rican law, Mrs. Martinez had no legal claim on her late husband’s estate since she had been adequately provided for in his will with an annual pension; thus, her lawsuit against La Asociacion de Senoras Damas del Santo Asilo de Ponce should be dismissed outright instead of being sent back for further proceedings.