The Gray Eagle was a Supreme Court case that dealt with the issue of whether a state could tax a vessel owned by a Native American tribe. The case arose when the state of New York attempted to impose a tax on the Gray Eagle, a vessel owned by the Seneca Nation of Indians. The Seneca Nation argued that the tax was unconstitutional because it violated the federal government's exclusive right to regulate commerce with Native American tribes. The Supreme Court agreed with the Seneca Nation, ruling that the state of New York had no authority to tax the vessel. The Court held that the federal government had exclusive authority to regulate commerce with Native American tribes, and that the state of New York had no authority to interfere with this power. The Court also held that the tax was an unconstitutional burden on the Seneca Nation's right to engage in commerce with other nations. The decision in The Gray Eagle established the principle that states cannot interfere with the federal government's exclusive power to regulate commerce with Native American tribes.

In The Gray Eagle, the Supreme Court was asked to decide whether a vessel that had been seized by Confederate forces during the Civil War could be forfeited as a prize of war. In an 8-1 decision, the court held that it could not. Justice Field delivered the opinion of the majority and argued that since Congress had never declared war against any state or other political body within its own borders, no such entity existed with which to make peace or declare victory over in order for prizes of war to be awarded. He further noted that even if there were such entities present at one time during hostilities between Union and Confederate forces, they would have ceased to exist upon reunification following Reconstruction. As such, he concluded that vessels captured by either side should remain under their respective owners' control without forfeiture as prizes of war.