In the Succession of Serralles v. Esbri case in 1905, the U.S Supreme Court was tasked with determining whether or not a Puerto Rican court had jurisdiction over an inheritance dispute involving property located in New York. The decedent, who died intestate (without a will), was domiciled in Puerto Rico but owned real estate property in New York. His heirs were residents of Spain and Cuba while his widow lived in Puerto Rico. The lower court ruled that it did have jurisdiction and ordered the sale of the New York properties to settle debts owed by the deceased's estate. The Supreme Court reversed this decision on appeal, ruling that under established principles of international law, real property is exclusively subject to laws and courts within whose territory it is situated - often referred to as lex rei sitae rule (law where property is situated). Therefore, only courts within New York could make decisions regarding these properties' disposition.

In the dissenting opinion for the Succession of Serralles v. Esbri case, it was argued that Puerto Rico should be considered a territory of the United States and thus subject to its laws, including those regarding inheritance tax. The dissenting justices disagreed with the majority's view that Puerto Rico was not part of U.S. territory but rather belonged to it in an international sense only. They believed this interpretation contradicted previous rulings which had established territories as integral parts of the nation, governed by federal law unless specifically exempted by Congress. Therefore, they contended that since no such exemption existed for Puerto Rican inheritance tax at that time, it should apply just like any other state or territorial law within U.S jurisdiction.