Swift v. Tyson
**Concept Overview of Swift v. Tyson**
Swift v. Tyson is a landmark U.S. Supreme Court case that emerged from a dispute over the validity of a bill of exchange between litigants from different states. The case, decided in 1842, questioned whether federal courts were required to follow state court decisions under Section 34 of the Judiciary Act of 1789, which mandated that federal courts adhere to state laws. The New York state courts would have voided the bill of exchange due to its association with original fraud, but the plaintiff contended that a general interstate commercial law necessitated the bill's payment. Ultimately, the Supreme Court ruled in a unanimous decision that Section 34 applied only to state statutes, allowing federal courts to interpret commercial disputes based on their own understanding of commercial principles. Justice Joseph Story, writing for the Court, hoped this would lead to greater uniformity in commercial law across the nation. However, the ruling created divergent bodies of state and federal commercial law, resulting in confusion. Swift v. Tyson remained a significant legal precedent until it was overruled by Erie Railroad Co. v. Tompkins in 1938, marking a pivotal shift in the relationship between state and federal law.
Swift v. Tyson
Date: January 25, 1842
Citation: 16 Pet. (41 U.S.) 1
Issues: Federal common law; federalism
Significance: In suits arising from diversity citizenship, the Supreme Court held that federal courts were free to exercise an independent judgment in principles of general commercial law, even if the principles were inconsistent with decisions of state courts.
Section 34 of the Judiciary Act of 1789 required federal courts to follow state “laws” whenever applicable. Before 1842, the requirement was usually assumed to extend to decisions of state courts, which blocked any serious attempt to establish a uniform commercial law. In Swift v. Tyson, two litigants living in different states had a conflict over the validity of a bill of exchange. In New York, where the trial took place, state courts would have voided the bill of exchange because it was corrupted by original fraud. However, the plaintiff argued that general interstate commercial law required that the bill must be paid.
By a 9-0 vote, the Supreme Court supported the plaintiff. Speaking for the Court, Justice Joseph Story held that section 34 referred only to state statutes and not to decisions of state courts. Federal courts, therefore, were free to resolve interstate commercial disputes according to their own interpretations of “the general principles and doctrines of commercial jurisprudence.” Although Story hoped that the decision would encourage national uniformity, it actually resulted in separate bodies of state and federal commercial common law, which was the source of much confusion. A century later, Swift was overruled in Erie Railroad Co. v. Tompkins (1938), the only time in history that the Court ever held that the decision of a previous Court had been unconstitutional.