In 1686, Rev. James became involved in a dispute with the government of New York, which had jurisdiction over East Hampton. He and several other East Hampton citizens were arrested for protesting against being part of New York and for selling whale oil in Connecticut without paying taxes. Rev. James preached a fiery sermon in support of his parishioners, which led to a warrant being issued for his arrest. He spent three weeks in jail before being released on the grounds that he was a loyal subject of King James II.
