''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 accepted in New York in which the Supreme Court of the United States 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 United States Constitution and laws of the federal government. The U.S. federal judiciary consists primaril ...

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 U.S. federal courts the power to hear lawsuits that do not involve a federal question. For a U.S. federal court to have diversity jurisd ...

under the Judiciary Act of 1789 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 In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...

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 ''Erie Railroad Co. v. Tompkins'', 304 U.S. 64 (1938), was a landmark U.S. Supreme Court decision in which the Court held that there is no general American federal common law and that U.S. federal courts must apply state law, not federal law, t ...

'', which dispensed with the concept of federal general common law in the United States.

Statute

Section 34 of the Judiciary Act of 1789 states that "the laws of the several states, except where the constitution,

treaties A treaty is a formal, legally binding written agreement between actors in international law. It is usually made by and between sovereign states, but can include international organizations, individuals, business entities, and other legal perso ...

statutes A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by le ...

of the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

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 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. The court in ''Currie v Misa'' declared ...

, 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 either generation, an official position, or a professional or academic qualification. In some languages, titles may be inserted between the f ...

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 Conflict of laws case law Diversity jurisdiction case law United States Erie Doctrine

Statute

Decision

Reasoning

See also

References

External links