From the beginning the United States has held territories outside the existing states. Some territories have been destined for statehood, others for independence, and still others for "permanent" territorial status. (See commonwealth status.) Early in our history Congress established courts to serve the territories, but it did not give their judges the life tenure and salary guarantees demanded by Article III for judges of constitutional courts. The constitutional status of these territorial courts was thus uncertain.
Chief Justice John Marshall sought to resolve the uncertainty in american insurance co. v. canter (1828) by inventing a new category called legislative courts. Such a court, Marshall said, is not created under Article III, which provides for the establishment of constitutional courts to exercise the judicial power of the United States. Rather it is created by Congress in carrying out its general legislative powers under Article I, including the power to provide for the government of the territories. Although the case at hand was one of admiralty and maritime jurisdiction, plainly within the federal judicial power, the fact that it arose in a territory made it appropriate for disposition by such a "legislative" territorial court. The result made good sense in a territory (Florida) that was to become a state; upon statehood, most of the work of the territorial courts would be taken over by the state courts, and there would be no place for a large body of life-tenured judges in the new federal courts. Furthermore, independence from the President and Congress receded in importance in a territorial government that had essentially the same power as a state to discard the principle of separation of powers.
Today legislative courts continue to serve in territories such as Guam and the Virgin Islands. In the Commonwealth of puerto rico, Congress has created a dual court system matching that of the district of columbia : one set of constitutional courts, operating wholly within the terms of Article III, and one set of commonwealth courts roughly equivalent to state courts.
Kenneth L. Karst