American Insurance Company vs. Carter 
MARSHALL, C. J. The plaintiffs filed their libel in this cause in the District Court of South Carolina to obtain restitution of 356 bales of cotton . .. which had been insured by them on a voyage from New Orleans to Havre de Grace, in France. The Point a Petre was wrecked on the coast of Florida, the cargo saved by the inhabitants, and carried into Key West, where it was sold for the purpose of satisfying the salvers; by virtue of a decree of a court, consisting of a notary and five jurors, which was erected by an act of the territorial Legislature of Florida. The owners abandoned to the underwriters, who proceeded against the property; alleging that the sale was not made by order of a court competent to change the property....
David Canter claimed the cotton as a bona Ode purchaser, under the decree of a competent court.... The district judge pronounced the decree of the Territorial Court a nullity, and awarded restitution to the libelants.... The libelants and claimant both appealed. . . .
The cause depends mainly on the question whether the property in the cargo saved, was changed, by the sale at Key West.... Its validity has been denied, on the ground, that it was ordered by an incompetent tribunal. The tribunal was constituted by an act of the territorial legislature of Florida, passed on the 4th July, 1823, which is inserted in the record. That act purports to give the power which has been exercised; consequently, the sale is valid, if the territorial legislature was competent to enact the law.
The course which the argument has taken, will require, that, in deciding this question, the court should take. into view the relation in which Florida stands to the United States.
The Constitution confers absolutely on the government of the Union the powers of making war and of making treaties; consequently, that government possesses the power of acquiring territory, either by conquest or by treaty. The usage of the world is, if a nation be not entirely subdued, to consider the holding of conquered territory as a mere military occupation, until its fate shall be determined at the treaty of peace. If it be ceded by the treaty, the acquisition is confirmed, and the ceded territory becomes a part of the nation to which it is annexed; either on the terms stipulated in the treaty of cession, or on such as its new master shall impose. On such transfer of territory, it has never been held that the relations of the inhabitants with each other undergo any change. Their relations with their former sovereign are dissolved, and new relations are created between them and the government which has acquired their territory. The same act which transfers their country transfers the allegiance of those who remain in it; and the law which may be denominated political is necessarily changed, although that which regulates the intercourse and general conduct of individuals remains in force, until altered by the newly created power of the state.
On the 2d of February, 1819, Spain ceded Florida to the United States. The 6th article of the treaty of cession contains the following provision: "The inhabitants of the territories which his Catholic Majesty cedes to the United States by this treaty shall be incorporated in the Union of the United States, as soon as may be consistent with the principles of the federal Constitution; and admitted to the enjoyment of the privileges, rights, and immunities of the citizens of the United States."
This treaty is the law of the land, and admits the inhabitants of Florida to the enjoyment of the privileges, rights and immunities of the citizens of the United States. It is unnecessary to inquire whether this is not their condition, independent of stipulation. They do not, however, participate in political power; they do not share in the government till Florida shall become a State. In the meantime Florida continues to be a territory of the United States, governed by virtue of that clause in the Constitution which empowers Congress "to make all needful rules and regulations respecting the territory or other property belonging to the United States."
Perhaps the power of governing a territory belonging to the United States which has not by becoming a State acquired the means of self-government may result necessarily from the facts that it is not within the jurisdiction of any particular State, and is within the power and jurisdiction of the United States. The right to govern may be the inevitable consequence of the right to acquire territory. Whichever may be the source whence the power is derived, the possession of it is unquestioned. In execution of it Congress, in 1822, passed "An Act for the Establishment of a Territorial Government in Florida ;" and on the 3d of March, 1823, passed another act to amend the act of 1822. Under this act the territorial legislature enacted the law now under consideration....
It has been contended that, by the Constitution, the judicial power of the United States extends to all cases of admiralty and maritime jurisdiction; and that the whole of this judicial power must be vested "in one supreme court, and in such inferior courts as Congress shall from time to time ordain and establish." Hence, it has been argued that Congress cannot vest admiralty jurisdiction in courts created by the territorial legislature.
We have only to pursue this subject one of the Constitution does not apply to it. The next sentence declares, that "the judges both of the supreme and inferior courts, shall hold their offices during good behavior." The judges of the superior courts of Florida hold their offices for four years. These courts, then, are not constitutional courts in which the judicial power conferred by the Constitution on the general government can be deposited. They are incapable of receiving it. They are legislative courts, created in virtue of the general right of sovereignty which exists in the government, or in virtue of that clause which enables Congress to make all needful rules and regulations, respecting the territory belonging to the United States. The jurisdiction with which they are invested, is not a part of that judicial power which is defined in the third article of the Constitution. but is conferred by Congress, in the execution of those general powers which that body possesses over the territories of the United States. Although admiralty jurisdiction can be exercised in the States, in those courts only which are established in pursuance of the third article of the Constitution; the same limitation does not extend to the territories. In legislating for them, Congress exercises the combined powers of the general, and of a state government.
We think, then, that the act of the territorial legislature erecting the court by whose decree the cargo of the Point a Petre was sold, is not "inconsistent with the laws and Constitution of the United States," and is valid. Consequently, the sale made in pursuance of it changed the property, and the decree of the circuit court, awarding restitution of the property to the claimant, ought to be affirmed, with costs.