In Woods v. Freeman, the Supreme Court of the United States was asked to decide whether a state court had jurisdiction over an action brought by a citizen of another state against a resident of that same state. The plaintiff, Woods, was from Ohio and sued Freeman in Illinois for breach of contract. The defendant argued that since he resided in Illinois and the cause of action arose there as well, only an Illinois court could hear it. However, the Supreme Court held that under Article III Section 2 Clause 1 (the diversity clause) federal courts have exclusive jurisdiction when parties are citizens from different states regardless if they reside within one particular state or not. Therefore, because both parties were citizens from different states at the time suit was filed in federal court - even though they lived together - it had exclusive jurisdiction over this case and thus reversed judgment rendered by lower courts which dismissed it on grounds that no such authority existed with them to try this matter between two residents living within their own borders who happened to be citizens from other states originally.

In Woods v. Freeman, the Supreme Court was asked to decide whether a state court had jurisdiction over a case involving land in Indian Territory that had been granted by treaty to certain Cherokee Indians. The majority opinion held that the state court did not have jurisdiction because it would be contrary to federal law and policy for states to exercise authority over lands reserved for Native Americans. Justice Field dissented from this decision, arguing that Congress had never expressly prohibited states from exercising such authority and therefore there was no legal basis on which the Supreme Court could deny them jurisdiction. He further argued that if Congress wanted to prevent states from exercising such power they should do so explicitly rather than leaving it up to courts like the Supreme Court who were ill-equipped with knowledge of local conditions or laws governing Indian affairs.