In the 1941 case of Toucey v. New York Life Insurance Co., the United States Supreme Court ruled on a matter concerning federal jurisdiction and injunctions against state court proceedings. The petitioner, Toucey, had been sued by New York Life in a Missouri state court over an insurance policy dispute. While that suit was pending, he filed for an injunction in federal district court to halt the state proceedings - arguing that his rights under federal law were being violated. However, both the District Court and Circuit Court of Appeals denied this request based on Section 265 of Judicial Code (28 U.S.C.A §379), which prohibits Federal courts from granting injunctions to stay proceedings in State courts except as expressly authorized by Act of Congress or where necessary in aid of its jurisdiction or to protect or effectuate its judgments. The Supreme Court upheld these decisions stating that there is no general statutory provision authorizing such interference with State courts; nor does it fall within any recognized head of equity jurisprudence justifying injunctive relief; nor can it be justified as necessary 'in aid'of Federal court's jurisdiction since they are not concurrent but alternative forums.

In the dissenting opinion for Toucey v. New York Life Insurance Co., Justice Frankfurter, joined by Justices Stone and Roberts, argued that the majority's interpretation of Section 265 of the Judicial Code was incorrect. They believed that this section did not bar federal courts from enjoining state court proceedings in all instances but only when those proceedings were initiated before any proceeding in a federal court. The dissenters contended that if Congress had intended to impose such an absolute prohibition on injunctions against state court proceedings, it would have done so explicitly rather than indirectly through ambiguous language. Furthermore, they asserted that there are situations where equity demands intervention by a federal court to prevent irreparable harm caused by state litigation - something which is prevented under the majority's reading of Section 265.