In United States v. Mouat, the United States Supreme Court was asked to decide whether a federal court had jurisdiction to hear a case involving a contract dispute between two citizens of the same state. The dispute arose out of a contract between the two parties, wherein one party agreed to pay the other a certain sum of money for the sale of certain goods. The contract was made in the state of New York, and the goods were to be delivered in the same state. The Supreme Court held that the federal court did have jurisdiction to hear the case. The Court reasoned that the contract was made in a state other than the one in which the goods were to be delivered, and thus the contract was "interstate" in nature. The Court further reasoned that the contract was of a commercial nature, and thus the federal court had jurisdiction to hear the case. The Court also held that the federal court had jurisdiction to hear the case even though the parties were citizens of the same state. The Court reasoned that the contract was of an interstate nature, and thus the federal court had jurisdiction to hear the case. In conclusion, the Supreme Court held that the federal court had jurisdiction to hear the case involving the contract dispute between two citizens of the same state. The Court reasoned that the contract was of an interstate nature, and thus the federal court had jurisdiction to hear the case.

In United States v. Mouat, the Supreme Court was asked to decide whether a federal court had jurisdiction over an action brought by the United States against a defendant for damages caused by his negligence in operating a steamboat on navigable waters of the United States. The majority opinion held that because Congress had not expressly granted jurisdiction to federal courts over such cases, they did not have it and thus dismissed the case. Justice Field dissented from this decision, arguing that under Article III of the Constitution, which grants Congress power “to make all laws which shall be necessary and proper” for carrying out its enumerated powers—including those related to regulating commerce with foreign nations and among states—Congress could grant jurisdiction to federal courts in these types of cases if it so chose. He argued further that since there were no state laws providing remedies for such injuries at sea or on navigable waters within their boundaries, allowing suits only in state courts would leave injured parties without any remedy whatsoever; therefore granting exclusive original cognizance of such actions to federal district courts was both necessary and proper under Article III.