The United States appealed a decision of the Circuit Court for the District of Columbia, which had found James Murphy not guilty on charges that he had violated an act of Congress by selling liquor without a license. The Supreme Court reversed and remanded the case to be tried again in accordance with its opinion. The court held that when Congress has passed laws regulating commerce among states, it is within their power to impose taxes or duties upon such commerce; and if any person violates those laws, they may be punished criminally as well as civilly. Furthermore, even though there was no express provision in the law making it criminal to sell liquor without a license, this did not prevent Congress from punishing such conduct under its general police powers. Therefore, since Murphy's actions were prohibited by law and constituted an offense against public policy punishable at common law or equity courts prior to passage of this act of congress , he could still be prosecuted for violating it despite his claim that there was no specific penalty provided for doing so.

In the case of The United States v. James Murphy, the Supreme Court was asked to decide whether a state court had jurisdiction over an offense committed on board a vessel in navigable waters within its limits. The majority opinion held that it did not have such jurisdiction, as maritime offenses are under exclusive federal control and cannot be tried by any other authority. However, Justice Grier dissented from this ruling and argued that states should have concurrent jurisdiction with the federal government when it comes to crimes committed on vessels in their territorial waters. He reasoned that since Congress has never explicitly stated otherwise, there is no reason why states should not exercise their power over criminal matters occurring within their boundaries even if they take place on watercrafts or involve foreign citizens or subjects of another nation. Furthermore, he noted that allowing state courts to try these cases would provide greater protection for individuals accused of maritime offenses than relying solely upon federal tribunals which may lack local knowledge and expertise regarding such matters.