Terry v. Commercial Bank of Alabama was a United States Supreme Court case that addressed the issue of whether a state court could enforce a contract that was made in violation of a federal law. The case involved a contract between the Commercial Bank of Alabama and the plaintiff, William Terry. The contract was for the sale of cotton, and it was made in violation of the National Bank Act of 1864. The Supreme Court held that the state court could not enforce the contract because it was in violation of the federal law. The Court reasoned that the National Bank Act was a federal law, and it was the duty of the federal courts to enforce it. The Court also noted that the state court had no authority to enforce a contract that was in violation of a federal law. The Court's decision in Terry v. Commercial Bank of Alabama established the principle that state courts cannot enforce contracts that are in violation of federal law. This principle has been applied in numerous cases since then, and it is an important part of the legal landscape today.

Justice Field delivered the dissenting opinion in Terry v. Commercial Bank of Alabama, arguing that the majority's decision was wrongfully decided and should be reversed. He argued that a state court cannot constitutionally issue an injunction against a federal officer acting within his authority under federal law. The Supreme Court had previously held in Ex Parte Young (209 U.S. 123) that such injunctions are unconstitutional because they interfere with the performance of official duties imposed by Congress upon officers of the United States, and thus violate Article III, Section 2 of the Constitution which prohibits states from passing laws impairing or interfering with contracts made under authority granted by Congress to its officers or agents for carrying out its powers and functions delegated to them by law. Justice Field further argued that even if it were possible for a state court to enjoin such action without violating Article III, Section 2, this case did not present any facts warranting an injunction as there was no evidence presented showing bad faith on behalf of defendant bank officials nor any other circumstances indicating fraud or illegality on their part; rather all parties agreed at trial that defendant bank officials acted honestly and in good faith throughout their dealings with plaintiff Terry regarding her loan application process - making clear there was no basis for granting an injunction against them here either way according to Justice Field's dissent reasoning .