Graver filed a new action in federal court seeking, as equitable relief, to have the previous dismissal set aside since it had been obtained through perjured testimony.

Two recent decisions of the Supreme Court, United States v. Throckmorton and Marshall v. Holmes, addressed the relevant question of whether Graver could reopen the suit, but with contrary interpretations.

So later that year the Seventh Circuit held for Graver that the perjury constituted extrinsic fraud which had prevented him from having his case fairly heard and decided.

Since Graver the Supreme Court has considered some other cases where the factual question of whether a litigant's deception and misbehavior has constituted intrinsic fraud which under Throckmorton cannot be used as a basis for relief, cases in which observers hoped it would resolve the conflict they saw with Marshall, which suggested a court could grant relief from a prior judgement allegedly obtained by fraud if it was unconscionable not to.

Courts of equity, empowered to give orders as relief rather than award monetary judgements as courts of law do, in England and later the U.S., had long dealt with cases where unsuccessful litigants seeking to negate a judgement against them at law had come before alleged perjury or forgery by the other party during the original action, often supported by just the testimony of one witness.

Since the insurer had decided to accept a certificate of the vessel's value from its captain even though Hodgson would not vouch for its accuracy, the Court held that they had lost their opportunity to make a case for fraud and seek an injunction against enforcement of the judgement against them.

It was also equally important that, per the legal Latin maxim interest rei publicae, ut sit finis litium, litigation not be allowed to continue indefinitely and that no one be punished or tried twice for the same offense.

In 1887, petitioner Sarah Marshall, a New York woman who owned a large Louisiana plantation, had been sued in state court by Mayer, a supplier, along with her tenants for nonpayment.

According to a document purportedly signed by Marshall that Mayer presented at trial in her absence, their defaults entitled him to payment apportioned between cash and raw cotton at the equivalent market value; based on this, the court held in his favor.

[8] In 1889 Graver, an Illinois man who had been enticed by Faurot, an Ohio banker he had deposited money with, to buy stock at an apparent discount; it was actually worthless.

Faurot had represented himself as a disinterested party when Graver bought the stock, but he actually had owned a portion of the company, and he and Bailey had made a written agreement to divide the profits from the sale between them.

[10] With this evidence in hand, Graver filed suit in federal court for the Northern District of Illinois, seeking equitable relief and a chance to retry the case.

As part of the record, the Seventh Circuit had submitted the entire case, which, Chief Justice Melville Fuller wrote, put the Supreme Court in a difficult position.

Judge William Allen Woods wrote for a unanimous three-judge panel that carefully considered the distinction drawn in the two cases.

"[M]anifestly it is not true of a complainant in equity that when he brings his bill he must come prepared with proof to maintain it, and to meet any defense which may be interposed", he wrote.

"[14] In the original case, Graver had strongly suspected the scheme but had no documentary evidence or witnesses other than the two defendants, both of whom swore falsely that there was no deceitful intent, interest or agreement between them.

[20] During the 1930s, federal courts seeking resolution of the apparent conflict between Throckmorton and Marshall took note of Graver's refusal to resolve the issue.

[25] Commentators hoped that when Hazel-Atlas Glass Co. v. Hartford-Empire Co., a complex case on the issue, came before the Court in 1944, it would choose between Throckmorton and Marshall.

But while citing both cases, Justice Hugo Black's opinion for a narrow majority instead created an exception for fraud committed by officers of the court.