Swift v. Tyson – Case Brief Summary
Summary of Swift v. Tyson, 41 U.S. (16 Pet.) 1, 10 L. Ed. 865 (1842).
Tyson (D) purchased certain land from speculators, unaware that they did not own it. The bill of exchange Tyson had given for the land eventually was given to Swift (P) to satisfy a debt owed by the speculators. Swift sought payment from Tyson but Tyson refused on the grounds that he had been fraudulently induced to purchase. Swift brought a lawsuit in diversity in federal district court in New York to enforce the bill of exchange.
The issue that arose at trial was whether a preexisting debt constituted consideration for an endorsement on the bill, making the endorsee (Swift) a holder in due course. Under federal law valid consideration would have been found, but under New York law it would not. The trial court held that under the Rules of Decision Act, New York law applied and found in favor of Tyson. Swift appealed.
- Does the term “laws of the several states” in the Rules of Decision Act include state common law?
Holding and Rule (Story)
- No. The term “laws of the several states” in the Rules of Decision Act does not include state common law.
The court held that the “laws of the several states” in the Act required federal courts to apply state statutory law but not state common law. The decisions of courts hardly constitute laws; they are at most only evidence of what laws are. The laws of the state are understood to mean the rules and enactments promulgated by the legislative authority, or long established by local customs having the force of law. The court stated that it had long considered that the Act was limited only to positive statutes of states. Under these facts, the common law (or judge made law) of New York would provide a defense to Tyson but the federal courts were not required to apply it by virtue of the Rules of Decision Act.
This case was overturned by Erie Railroad Co. v. Tompkins.