The citation for this case is Chisholm v. State of Georgia, 2 US [Dall.] 419. The case was argued on February 5, 1793 and decided on February 18, 1793. It was a 4-1 decision. Chief Justice John Jay, Justices Cushing, Wilson, and Blair wrote seriatim opinions, and Justice Iredell wrote an opinion in dissent.
“The Chisholm case arose from a series of events beginning in 1777. At that time American troops under the command of General James Jackson, quartered near Savannah, were in grave need of supplies. On October 31, 1777, the Executive Council of Georgia authorized Thomas Stone and Edward Davies of Savannah, as commissioners of the state, to purchase goods from Robert Farquhar, a merchant of Charleston, South Carolina.” [Doyle Mathis, “Chisholm v. Georgia: Background and Settlement,” The Journal of American History, Vol. LIV, No. 1, June, 1967, p. 20] Farquhar delivered the goods and was never paid the $169,613.33 he was owed. Farquhar died in 1784. The executors of his estate were John Farquhar, Robert’s father, Peter Dean, a Savannah merchant, and Alexander Chisholm, a Charleston merchant. “In 1789, a petition was presented to the legislature of Georgia asking for the settlement of the Farquhar claim. On November 25 the committee on petitions in the house of representatives recommended against paying the claim because Stone and Davies had received state funds for this purpose. The committee suggested that the proper remedy for those holding the Farquhar claim was to bring a suit against Stone and the representatives of Davies, who was deceased by the time of the committee’s report in November 1789. The house voted not to pay the claim, and the Georgia senate concurred on December 12, 1789. Following the state’s failure to pay the claim, Chisholm brought suit against it in the United States Circuit Court for the District of Georgia.” [Ibid., p. 22]
The Circuit Court heard the case in October 1791. Supreme Court Justice James Iredell and Judge Nathaniel Pendleton heard the case and decided Georgia could not be sued by a citizen of another state. Chisholm appealed to the Supreme Court of the United States. In his opinion, Justice John Blair wrote, “When sovereigns are sued in their own Courts, such a method may have been established as the most respectful form of demand; but we are not now in a State-Court; and if sovereignty be an exemption from suit in any other than the sovereign’s own Courts, it follows that when a State, by adopting the Constitution, has agreed to be amenable to the judicial power of the United States, she has, in that respect, given up her right of sovereignty.” [2 US 419, 452] Justice James Wilson wrote, “As a Judge of this Court, I know, and can decide upon the knowledge, that the citizens of Georgia, when they acted upon the large scale of the Union, as a part of the ‘People of the United States,’ did not surrender the Supreme or Sovereign Power to that State; but, as to the purposes of the Union, retained it to themselves. As to the purposes of the Union, therefore, Georgia is NOT a sovereign State. If the Judicial decision of this case forms one of those purposes; the allegation, that Georgia is a sovereign State, is unsupported by the fact.” [2 US 419, 457] He further wrote, “The articles of confederation, it is well known, did not operate upon individual citizens; but operated only upon states, This defect was remedied by the national Constitution, which, as all allow, has an operation on individual citizens. But if an opinion, which some seem to entertain, be just; the defect remedied, on one side, was balanced by a defect introduced on the other: For they seem to think, that the present Constitution operates only on individual citizens, and not on States. This opinion, however, appears to be altogether unfounded. When certain laws of the States are declared to be ‘subject to the revision and controul of the Congress;’ it cannot, surely, be contended that the Legislative power of the national Government was meant to have no operation on the several States. The fact, uncontrovertibly established in one instance, proves the principle in all other instances, to which the facts will be found to apply. We may then infer, that the people of the United States intended to bind the several States, by the Legislative power of the national Government. In order to make the discovery, at which we ultimately aim, a second previous enquiry will naturally be Did the people of the United States intend to bind the several States by the Executive power of the national Government? The affirmative answer to the former question directs, unavoidably, an affirmative answer to this.” [2 US 419, 464] He concludes, “Whoever considers, in a combined and comprehensive view, the general texture of the Constitution, will be satisfied, that the people of the United States intended to form themselves into a nation for national purposes. They instituted, for such purposes, a national Government, complete in all its parts, with powers Legislative, Executive and Judiciary; and, in all those powers, extending over the whole nation. Is it congruous, that, with regard to such purposes, any man or body of men, any person natural or artificial, should be permitted to claim successfully an entire exemption from the jurisdiction of the national Government? Would not such claims, crowned with success, be repugnant to our very existence as a nation? When so many trains of deduction, coming from different quarters, converge and unite, at last, in the same point; we may safely conclude, as the legitimate result of this Constitution, that the State of Georgia is amenable to the jurisdiction of this Court.” [2 US 419, 465-466] According to Justice William Cushing, “Whatever power is deposited with the Union by the people for their own necessary security, is so far a curtailing of the power and prerogatives of States. This is, as it were, a self-evident proposition; at least it cannot be contested. Thus the power of declaring war, making peace, raising and supporting armies for public defence, levying duties, excises and taxes, if necessary, with many other powers, are lodged in Congress; and are a most essential abridgement of State sovereignty. Again; the restrictions upon States; ‘No State shall enter into any treaty, alliance, or confederation, coin money, emit bills of credit, make any thing but gold and silver a tender in payment of debts, pass any law impairing the obligation of contracts;’ these, with a number of others, are important restrictions of the power of States, and were thought necessary to maintain the Union; and to establish some fundamental uniform principles of public justice, throughout the whole Union. So that, I think, no argument of force can be taken from the sovereignty of States.” [2 US 419, 468] Finally, Chief Justice John Jay wrote, “The people, in their collective and national capacity, established the present Constitution. It is remarkable that in establishing it, the people exercised their own rights, and their own proper sovereignty, and conscious of the plenitude of it, they declared with becoming dignity, ‘We the people of the United States, do ordain and establish this Constitution.’ Here we see the people acting as sovereigns of the whole country; and in the language of sovereignty, establishing a Constitution by which it was their will, that the State Governments should be bound, and to which the State Constitutions should be made to conform. Every State Constitution is a compact made by and between the citizens of a State to govern themselves in a certain manner; and the Constitution of the United States is likewise a compact made by the people of the United States to govern themselves as to general objects, in a certain manner. By this great compact however, many prerogatives were transferred to the national Government, such as those of making war and peace, contracting alliances, coining money, etc. etc.” [2 US 419, 470-471]
The Supreme Court of the United States, in this first great decision it made, clearly declared a state was not sovereign. “In Chisholm, the Justices of the Supreme Court rejected Georgia’s claim to be sovereign. They concluded instead that, to the extent the term ‘sovereignty’ is even appropriately applied to the newly adopted Constitution, sovereignty rests with the people, rather than with state governments.” [Randy E. Barnett, “The People or the State? Chisholm v. Georgia and Popular Sovereignty,” Virginia Law Review, Vol. 93 (2007), p. 1730]
There was a strong reaction against the decision because it allowed a citizen of one state to sue another state. This led directly to the Eleventh Amendment. “On the day the Court issued its order, February 19, 1793, a resolution was introduced in the United States House of Representatives for an amendment to the Constitution. The following day a resolution for an amendment was introduced in the Senate.” Doyle Mathis, “Chisholm v. Georgia: Background and Settlement,” The Journal of American History, Vol. LIV, No. 1, June, 1967, pp. 25-26]
The fact that states are not sovereign means a state doesn’t have the power to unilaterally secede from the United States. This was only one of many times the Supreme Court made a ruling that is inconsistent with a state being able to unilaterally secede.