In Penhallow et al. v Doane's Administrators, the Supreme Court of the United States was asked to decide whether a state court had jurisdiction over an admiralty case. The plaintiffs argued that since their claim arose from a contract made on board a vessel in navigable waters, it should be heard by an admiralty court and not by the state courts. The defendants argued that because they were citizens of Massachusetts, where the suit was brought, and because there was no federal district court in Massachusetts at this time (1795), then only the state courts could hear such cases. After considering both sides' arguments, Chief Justice John Jay ruled for the defendants stating that while admiralty law did have some authority over maritime contracts between parties who were non-residents of any particular state or nation; when all parties involved are residents of one particular State then only its own laws can apply to them regardless if it is related to navigation or commerce on navigable waters or not.

In the case of Penhallow et al. versus Doane's Administrators, the dissenting opinion argued that a statute passed by New Hampshire in 1786 was unconstitutional and should not be applied to this particular case. The majority had ruled that the statute did apply, but Justice Paterson disagreed with their interpretation of it. He argued that since it was an ex post facto law, which is prohibited by Article I Section 10 of the Constitution, it could not be used as justification for taking away property rights from those who had already acquired them before its passage. Furthermore, he believed that if such laws were allowed to stand then they would set a dangerous precedent whereby legislatures could pass any number of statutes retroactively changing existing legal relationships between parties without due process or regard for vested rights and interests.