In New York Guaranty Company v. Memphis Water Company, the Supreme Court of the United States was asked to decide whether a state court could enjoin a federal court from hearing a case. The dispute arose when the Memphis Water Company (MWC) defaulted on a bond issued by the New York Guaranty Company (NYG). NYG sued MWC in federal court, but MWC sought an injunction from the state court to prevent the federal court from hearing the case. The Supreme Court held that the state court did not have the authority to enjoin the federal court from hearing the case. The Court reasoned that the state court was not a superior court to the federal court, and thus did not have the power to enjoin the federal court from hearing the case. The Court also held that the state court did not have the power to enjoin the federal court from hearing the case because the federal court had exclusive jurisdiction over the case. The Court concluded that the state court did not have the authority to enjoin the federal court from hearing the case, and thus the injunction was invalid.

Justice Field delivered the dissenting opinion in New York Guaranty Company v. Memphis Water Company, arguing that the majority's decision was contrary to established precedent and would lead to an unjust result. He argued that under prior decisions of the Supreme Court, a party who had been wrongfully deprived of their property could not be held liable for damages resulting from such deprivation if they had acted in good faith and without negligence. In this case, he noted that there was no evidence of bad faith or negligence on behalf of New York Guaranty Company; rather it appeared as though they were simply misled by false representations made by Memphis Water Company regarding its title to certain bonds which formed part of a larger transaction between them. As such, Justice Field concluded that New York Guaranty should not have been held liable for any losses suffered by Memphis Water due to their reliance on those misrepresentations.