In the 1913 case of Torres v. Lothrop, Luce & Company, the U.S. Supreme Court was asked to consider whether a lower court had jurisdiction over a dispute involving an American company and a foreign citizen who lived abroad but owned property in America. The plaintiff, Mr. Torres, was a Spanish citizen living in Spain who sued Lothrop, Luce & Co., an American corporation based in New York for breach of contract related to his properties located within United States territory (Puerto Rico). The defendant argued that since Mr.Torres resided outside the U.S., he should not be allowed to sue them under federal law. The Supreme Court ruled against Mr.Torres stating that while it is true that federal courts have jurisdiction over disputes between citizens of different states or between an American citizen and foreigner if they are both residing within US territories; however this does not extend to foreigners residing outside US territories even though they own property inside its borders.

The dissenting opinion in the Torres v. Lothrop, Luce & Company case argued that the court majority had erred in its interpretation of jurisdictional matters and contract law principles. The dissent emphasized that a corporation should not be allowed to evade liability simply by moving its principal place of business or incorporating elsewhere after entering into a contract. It was also pointed out that the plaintiff's claim was based on an alleged breach of duty under a New York statute which applied regardless of where the defendant company might later choose to incorporate or operate from. Therefore, it was contended that New York courts did have jurisdiction over this matter and could enforce their own laws against corporations operating within their boundaries at any given time.