In 1798 the New York Legislature granted Robert R. Livingston and Robert Fulton the exclusive right for twenty years to navigate the waters within the jurisdiction of the state with boats moved by fire or steam, a privilege later renewed and extended in 1803 and 1807. The right was assigned first to John R. Livingston and then to Aaron Ogden, who thereby claimed authority to operate steamboats between Elizabethtown, New Jersey, and New York City. Thomas Gibbons, meanwhile, took possession of two steamboats, the Stoudinger and the Bellona, which he employed in the same waters while holding a license issued under the federal Act of February 18, 1793, for enrolling and licensing vessels to be employed in the coasting trade and fisheries.
Gibbons filed a bill in the Court of Chancery of New York against Ogden seeking an injunction to restrain Ogden from navigating those waters with steamboats. The bill recited the state grants and the assignment to Ogden, alleged that Ogden was violating the exclusive privilege, and prayed for injunctive relief. Gibbons answered that his vessels were duly enrolled and licensed under the 1793 federal statute and insisted on his right to navigate between Elizabethtown and New York notwithstanding the state legislation.
The Chancellor awarded the injunction and, after hearing, perpetuated it on the ground that the New York acts were valid. The Court for the Trial of Impeachments and Correction of Errors, the highest court of the state to which the cause could be carried, affirmed the decree. Gibbons then appealed to the Supreme Court of the United States.
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