Marbury v. Madison, 1 Cranch 137 (1803). The Supreme Court, speaking through Chief Justice John Marshall, for the first time declared an act of the United States Congress unconstitutional and thus established the precedent for judicial review. The case arose from the appointment of the so-called "midnight judges" -- judicial appointments made during the last days of the outgoing Federalist administration of John Adams. Adams appointed William Marbury as a justice of the peace in the District of Columbia, and his commission was signed by the Secretary of State, John Marshall, but not delivered. When the new Republican administration took over, the Secretary of State, James Madison, refused to deliver the commission. Marbury filed suit against Madison in the Supreme Court under Section 13 of the Judiciary Act of 1789 (the act which had established the particulars of the new federal court system). That section, Marbury, contended gave the Supreme Court the right to hear the case and issue a writ of mandamus directing the Secretary of State to deliver his commission.
Marshall well knew that an order to Madison to deliver the commission might be ignored; and if it were, the authority of the Supreme Court could be irreparably damaged, and the Federalist Party's strength in the federal judiciary effectively neutralized. Marshall began his opinion by stating unequivocally that Marbury deserved the commission, and that the Republican administration was wrong in not delivering it. That said, however, Marshall held that the Supreme Court did not have the power to give Marbury the remedy he wanted. Section 13 of the Judiciary Act, under which the suit had been brought was unconstitutional because it had improperly enlarged the original jurisdiction (the right to hear a case in the first instance) of the Supreme Court. That jurisdiction was established by the Constitution itself, and, Marshall stated, a federal law in contravention of the Constitution was void.
The notion that courts could declare acts of a legislature void was not new with Marshall. In both seventeenth-century England and late eighteenth-century America, courts had suggested that legislation that violated "natural law" or the fundamental principles of government might be void, and Alexander Hamilton, writing in defense of the proposed Constitution in Federalist no. 78, had sketched out the logic of judicial review that Marshall would follow in Marbury v. Madison. Marshall, however, established the specific judicial power in the American constitutional system, and while it was not until 1857 that another federal law would be declared unconstitutional, the Marshall court subsequently reaffirmed in a number of cases its power to consider the constitutionality of federal laws. Marshall's opinion also began the distinction between political questions (in this case, the powers of a coordinate branch of the government) that the court would not resolve, and judicial ones, that were properly its responsibility.
Sources:
Robert L. Clinton, Marbury v. Madison and Judicial Review (1968).
Edward S. Corwin, John Marshall and the Constitution, A Chronicle of the Supreme Court (1921).
Charles F. Hobson, The Great Chief Justice: John Marshall and the Rule of Law (1996)