''Swift v. Tyson'', 41 U.S. (16 Pet.) 1 (1842), was a case brought in diversity in the Circuit Court for the Southern District of New York on a

bill of exchange A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...

accepted in New York in which the

Supreme Court of the United States The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all Federal tribunals in the United States, U.S. federal court cases, and over Stat ...

determined that

United States federal courts The federal judiciary of the United States is one of the three branches of the federal government of the United States organized under the Constitution of the United States, United States Constitution and Law of the United States, laws of the fed ...

that heard cases brought under their

diversity jurisdiction In the law of the United States, diversity jurisdiction is a form of subject-matter jurisdiction that gives United States federal courts the power to hear lawsuits that do not involve a federal question. For a federal court to have diversity ju ...

under the

Judiciary Act of 1789 The Judiciary Act of 1789 (ch. 20, ) was a United States federal statute enacted on September 24, 1789, during the first session of the First United States Congress. It established the federal judiciary of the United States. Article Three of th ...

must apply statutory state laws when the state legislatures in question had spoken on the issue, but did not have to apply the state's

common law Common law (also known as judicial precedent, judge-made law, or case law) is the body of law primarily developed through judicial decisions rather than statutes. Although common law may incorporate certain statutes, it is largely based on prece ...

if the state legislatures had not spoken on the issue.. The ruling meant that the federal courts that decided matters not specifically addressed by the state legislature had the authority to develop a federal general common law. In 1938, this decision was overruled by '' Erie Railroad Co. v. Tompkins'', which dispensed with the concept of federal general common law in the United States.

Statute

Section 34 of the

states that "the laws of the several states, except where the constitution,

treaties A treaty is a formal, legally binding written agreement between sovereign states and/or international organizations that is governed by international law. A treaty may also be known as an international agreement, protocol, covenant, convention ...

statutes A statute is a law or formal written enactment of a legislature. Statutes typically declare, command or prohibit something. Statutes are distinguished from court law and unwritten law (also known as common law) in that they are the expressed wil ...

of the

United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

shall otherwise recognise or provide, shall be regarded as rules of decision in trials at common law, in the courts of the United States, in cases where they apply."

Decision

The Court decided that a bona fide holder of a

negotiable instrument A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. More specifically, it is a document contemplated by or consisting of a ...

for valuable

consideration Consideration is a concept of English law, English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. It is commonly referred to a ...

, without any notice of the facts that implicate its validity as between the antecedent parties, if he takes it under an endorsement made before the same becomes due, holds the

title A title is one or more words used before or after a person's name, in certain contexts. It may signify their generation, official position, military rank, professional or academic qualification, or nobility. In some languages, titles may be ins ...

unaffected by those facts and may recover thereon although, as between the antecedent parties, the transaction may be without any legal validity. It decided that Section 34 of the Judiciary Act of 1789 does not restrict federal courts hearing diversity of citizenship cases from deriving their "own" common law. It sustained the determination of the lower federal court that under the general common law (with reference to general principles of commercial jurisprudence), a pre-existing debt constitutes a valuable consideration for a negotiable instrument.

Reasoning

Common law is not strictly local; court decisions aspire towards true interpretations, which are to be sought not in the decisions themselves but in general principles and doctrines. Court decisions do not constitute laws or authority as to what the law is but only evidence of what the law is. Strictly local law consists of the state's positive statutes, constructions thereof adopted by state courts, and rights and titles to things having a permanent locality, such as to real estate and other matters immovable and intraterritorial in their nature and character. The "common" law—which is not local—includes the rights and titles created in contracts or other instruments of a commercial nature, which are to be sought in general principles of commercial jurisprudence. In Section 34 of the Judiciary Act of 1789, "the laws of the several states" referred to state laws that were strictly local and so not to a state's "common" law. Thus, it did not bind federal courts to state commercial jurisprudence. The Federal jurisdiction is free to interpret the general common law. The Supreme Court, therefore, sustained the determination of the lower federal court that under the general common law, a pre-existing debt constitutes a valuable consideration for a negotiable instrument.

References

External links

* * {{USArticleIII United States Constitution Article Three case law United States Supreme Court cases 1842 in United States case law Federal common law case law Overruled United States Supreme Court decisions Negotiable instrument law United States Supreme Court cases of the Taney Court United States conflict of laws case law Diversity jurisdiction case law United States Erie Doctrine

Statute

Decision

Reasoning

See also

References

External links