Both Thomas Gibbons and Aaron Ogden were given the right to operate steamboats between New York and New Jersey. Gibbons operated with a federal coastal license and Ogden operating with a monopoly license given to him by New York. Ogden sued against Gibbons because he did not agree with Gibbons operating on the same route as him.
After Ogden filled his bill in the Court of Chancery of that state against Gibbons, Gibbons stated that both his boats were duly enrolled and licensed to be employed in carrying on the coasting trade under the Act of Congress passed February 18, 1793. At the hearing the Chancellor perpetuated the injunction, being the opinion that the said acts were not in conflict to the Constitution or the law of the U.S. were valid. This was confirmed by the Court for the Trail of Impeachments and Correction of Errors, which is the highest court of law and equity in the state which the cause could be carried. After losing twice Gibbons appealed in the Supreme Court.
Petitioner: The license created under a congressional acts was valid because the laws of a state is lower than the federal laws. Commerce Clause gives Federal Government the power and control over interstate commerce. Federal coasting license over rules any New York regulation.
Respondent: The New York law protected Ogden's right to operate his steamboats in New York and the state law was the ruling power over the issue. New York has the authority to regulate business within its boundaries. New York did not do anything wrong by trying to regulate commerce.
This case did not take away from the Constitution because it was decided at the end that the national government does have the power over commerce as stated in the Constitution, Article 1, Section 8, Clause 3.
The United States Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Trail."