Thompson v. Gray was a case heard by the United States Supreme Court in 1816. The dispute involved two parties, Thompson and Gray, who had entered into an agreement to build a mill on land owned by Thompson. After completing the construction of the mill, however, Gray refused to pay for his portion of the work as agreed upon in their contract. In response, Thompson sued for breach of contract and sought damages from Gray for failing to fulfill his obligations under their agreement. The Supreme Court ultimately ruled in favor of Thompson and held that he was entitled to recover damages from Gray due to his breach of contract. This decision established important precedent regarding contracts between individuals or businesses which has been used ever since as guidance when interpreting contractual disputes today

In Thompson v. Gray, the Supreme Court was tasked with determining whether a state court had jurisdiction to decide an issue of federal law. The majority opinion held that the state court did not have such authority and thus reversed its decision in favor of the appellant, Thompson. Justice Story dissented from this ruling on two grounds: firstly, he argued that it is within a state's power to determine matters concerning their own citizens; secondly, he maintained that Congress has never explicitly prohibited states from deciding issues involving federal law. He further noted that if Congress intended for only federal courts to hear cases involving questions of national law then they would have made such provisions clear in legislation or other official documents. Ultimately, Story concluded by asserting his belief that allowing states some degree of autonomy over these matters serves as an important check against potential abuses by the national government and should be respected accordingly.