The Free State case was a United States Supreme Court case that dealt with the issue of whether a state could be sued in federal court. The case involved a dispute between the state of Maryland and the Free State of Maryland, a private corporation. The Free State of Maryland had been formed by a group of individuals who had purchased land from the state of Maryland. The state of Maryland had then attempted to collect taxes from the Free State of Maryland, which the Free State of Maryland refused to pay. The Free State of Maryland then sued the state of Maryland in federal court, claiming that the state of Maryland had violated its constitutional rights. The Supreme Court held that the state of Maryland could not be sued in federal court. The Court reasoned that the state of Maryland was a sovereign entity and, as such, was immune from suit in federal court. The Court also held that the Free State of Maryland was not a state and, therefore, could not sue the state of Maryland in federal court. The Court further held that the Free State of Maryland was a private corporation and, as such, could not sue the state of Maryland in federal court. The Free State case established the principle of sovereign immunity, which holds that a state cannot be sued in federal court. This principle has been applied in numerous cases since the Free State case and has been used to protect states from being sued in federal court.

The dissenting opinion in The Free State case argued that the majority's decision was inconsistent with precedent and failed to properly consider the facts of the case. Justice Field, who wrote for the dissenters, noted that a vessel is considered "free" when it has been released from any legal restraint or obligation imposed by a court decree. In this instance, however, there had been no such release; instead, an agreement between two parties had resulted in one party voluntarily relinquishing its claim to ownership of the vessel. According to Field's interpretation of existing law and precedent at the time, this did not constitute freedom from all legal restraints or obligations as required under maritime law for a vessel to be considered free. Therefore he concluded that since there was no evidence presented showing otherwise - i.e., evidence demonstrating that some other form of legal restraint existed - then it should have been determined that The Free State was not legally free but rather subject to certain restrictions on its use and disposition due to prior claims against it by third parties which were still unresolved at trial.