Robert H. Jackson Center

The Rise and Fall of Swift v. Tyson

This article originally appeared at 24 ABAJ 609 (1938). Reprinted by permission of the American Bar Association Journal.

"THE RISE AND FALL OF SWIFT v. TYSON"

Address delivered before the Section of Real Property, Probate and Trust Law, at Cleveland on Monday, July 25.

Overruling of Swift v. Tyson, One of the Most Dramatic Episodes in the History of the Supreme Court and One Not Fully Appreciated by the Profession or the Public--The Beginnings of Its Expansive Doctrine--Logical Inconsistencies Marking the Application of the Rule--Climax Perhaps Reached in Court's Treatment of a State Constitution in Rowan v. Runnels--Doctrine of the Celebrated Case of Gelpcke v. Dubuque Realistically a Logical Extension of Rule--Extent to Which Rule Tended to Promote Uniformity not Susceptible of Statistical Proof--How the Court Might Have Avoided a Resort to Constitutional or Statutory Grounds in Its Decision.

BY HON. ROBERT H. JACKSON

Solicitor General of the United States

On April 25 of this year there occurred one of the most dramatic episodes in the history of the Supreme Court, with the overruling of the 96-year old doctrine of Swift v. Tyson (16 Pet. 1). This change was not impelled by "supervening economic events," nor was it a part of the program of any political party. It was a change of a legal doctrine, the very existence of which was but little known outside of our profession. The change was made on the initiative of a majority of the Court itself, without even demand by a litigant or argument of the point at the bar. It involved a volunteered confession that the Federal judiciary almost from the foundation of our government has pursued a course now clearly unconstitutional, has all these years been exercising a power not conferred by the Constitution, and in so doing has invaded rights reserved by the Constitution to the several states. The consequences to litigants are not yet clearly apparent, but the importance of this event to our developing jurisprudence has seemed to make the rise and fall of Swift v. Tyson an appropriate subject for my paper today.

The drama of this reversal of doctrine has not, I think, been fully appreciated by the public and the profession; but it must have been evident enough to the litigants in Erie Railroad Co. v. Tompkins, which was the instrument by which Swift v. Tyson received its official execution.

Harry Tompkins received severe injuries upon being struck by a swinging door of an Erie Railroad while he was walking along the railroad's right-of-way beside its main track in Pennsylvania. Tompkins brought suit in the Federal court for Southern New York, where the railroad was incorporated. The jury brought in a verdict of $30,000 and the Circuit court of Appeals for the Second Circuit affirmed the Judgment. Both courts ruled that the liability of the railroad did not depend upon the law of Pennsylvania, where the accident occurred, as laid down m the decisions of the Pennsylvania courts. Since the case was one of tort liability, it was clear that the doctrine of Swift v. Tyson applied and that the Federal courts were bound by the common law rules of the state but were free to apply the so-called Federal common law as developed by the Federal courts in the exercise of their independent judgment. All this seemed clear enough, and doubtless Tompkins felt secure in the prospect of receiving his $30,000.

The first intimation that all was not well must have come when the Supreme Court granted certiorari. But even then there could hardly have been any fear that the 96-year-old bulwark of Tompkins' case would be destroyed, for the railroad company in its brief was careful to avoid any suggestion that its argument involved a repudiation of Swift v. Tyson. "We do not question the finality of the holding of this Court in Swift v. Tyson," the company stated (p. 27), and the argument proceeded on the basis of an attempt to show that the decisions of the Pennsylvania courts on the question were so settled that they had become a local usage and so within an exception to the rule of Swift v. Tyson. After making such an argument, the brief continued: "If the foregoing statement is correct, the Circuit Court of Appeals has misconceived the doctrine of this Court and, it may be added, the persistent criticisms of Swift v. Tyson and succeeding cases have been largely misdirected" (p. 25). In view of the rule followed in the first minimum wage case from New York, the Tipaldo case (298 U. S. 587), that the Court would not reconsider a precedent unless asked to do so by the petitioner, Tompkins seemed to run little risk of losing his judgment. He reckoned, however, without the Court, for its opinion opened with the statement: "The question for decision is whether the oft-challenged doctrine of Swift v. Tyson shall now be disapproved." The Court disapproved by a vote of six to two. Presumably Harry Tompkins was unfamiliar with the deep and stormy currents of political and legal controversy in which he had unhappily been caught. He probably does not appreciate the honor of giving his name to a leading case, at a cost of $30,000. And he probably has little understanding of the nature of the judicial process which destined our jurisprudence to take a violent swing on the hinges of that loose car door.

II

As lawyers we can perhaps understand a little better than the litigant can the forces which served so dramatically to defeat his claim. Let us go back to the beginning, to Swift v. Tyson itself.

That case was an action on a bill of exchange, brought by the holder against the acceptor; the defense was a fraud of the drawer of the bill. The question for decision was whether the holder, who had taken the bill as payment for an antecedent debt, was free from this defense of fraud as a bona fide purchaser for value. The law of New York, where the bill had been accepted and endorsed, was not yet reduced to statute, and the decisions of the New York courts were in some confusion on the subject. Mr. Justice Story, however, who delivered the opinion of the Supreme Court in the case, assumed for purposes of the decision that under the New York authorities the holder was not a purchaser for value. Making that assumption, Justice Story proceeded to disregard the New York rule and to lay down the rule that on questions of general commercial law the decisions of the courts of the state where the transaction occurred were not binding on the Federal courts, and that the Federal courts were free to apply the rules of the common law in accordance with their judgment of what those rules were. Quoting Cicero, that the law is not one thing at Rome and another at Athens, Justice Story in effect concluded that the same must be true of New York and Boston. As for Section 34 of the Judiciary Act of 1789, which provided that "The laws of-the several States . . . shall be regarded as rules of decision in trials of common law, in the Courts of the United States, in cases were they apply," Justice Story ruled that the concept of laws as there used was limited to statute laws also to well-settled local usages in matters of purely local concern such as title to real property. Accordingly, Justice Story felt free to announce for the Federal courts the rule that one who takes a bill of exchange, whether as payment or as security for an antecedent debt, takes free of defenses as between the original parties.

It will be seen at the very outset that the doctrine of Swift v. Tyson was uncalled for by the case itself, since there was no question in the case of the taking of a bill as mere security, and on the question actually presented the decisions of New York might well have been deemed to support the holding of the Court. The undue expansiveness of the decision did not pass unquestioned. Mr. Justice Catron dissented from the dictum in the case regarding the effect of taking a bill as security for an antecedent debt, stating: “ I never heard this question spoken of as belonging to the case, until the principal opinion was presented last evening” (16 Pet. At 23). This complaint in the dissent curiously resembles the complaint in the dissent in the Tompkins case itself.

How is the decision in Swift v. Tyson to be explained? It is not enough to regard it as turning merely upon a construction of Section 34 of the Judiciary Act. For even if the term “laws” in that section meant only the statute laws of the state, the consequence was that in the absence of statute law the Federal courts were free, so far as Congress was concerned, to establish a rule either requiring conformity to the decisions of the state or proclaiming the independence of the Federal courts from those decisions. In adopting the latter alternative, the Court was undoubtedly influenced by a desire to promote uniformity of decision in the states through the persuasive example of Federal courts’ decisions. But prior to 1842, when Swift v. Tyson was decided, this consideration did not seem to be of controlling weight. In the earlier years the Court seemed to be more apprehensive of the danger of creating a conflict of decisions between State and Federal courts deciding similar questions, questions which were presented to a Federal court because they involved any issue of Federal statutory or constitutional law, but solely because they arose in a controversy between citizens of different states. In 1814 Justice Bushrod Washington, sitting at circuit, pointed out the danger of this conflict. “The injustice as well as the absurdity of the former [Federal Courts] deciding by one rule, and the latter [state courts] by another, would be too monstrous to find a place in any system of government."(n1) What seemed absurd and monstrous in 1814 seemed sound and wise in 1842. As late as 1834, the Supreme Court appeared to set its face sternly against any notion of a Federal common law distinct from the common law of a state. The question was discussed in Wheaton v. Peters (8 Pet. 591) which was a suit by the former Reporter of the Court against the then Reporter for publishing in an abridged form the Court's opinions which had been reported theretofore. In those days it can be seen that the center of controversy extended beyond the Court itself to include its Reporter.(n2) In disposing of an argument by the former Reporter Wheaton that a common-law right of authors apart from the copyright existed in this country, the Court said (p. 658) :

"It is clear, there can be no common law of the United States. The federal government is composed of twenty four sovereign and independent states; each of which may have its local usages, customs and common law. There is no principle which pervades the Union and has the authority of law, that is not embodied in the Constitution or laws of the Union. The common law could be made a part of our federal system, only by legislative adoption. When, therefore, a common-law right is asserted, we must look to the state in which the controversy originated.”

In the face of these expressions, the expansive doctrine of Swift v. Tyson seems almost inexplicable. An explanation was ventured, however, by John Chipman Gray, in his Nature and Sources of the Law (2d ed., p. 253):

“Among the causes which led to the decision in Swift v. Tyson, the chief seems to have been the character and position of Judge Story. He was then by far the oldest judge in commission on the bench; he was a man of great learning, and of reputation for learning greater even then the learning itself; he was occupied at the time in writing a book on bills of exchange, which would, of itself, lead him to dogmatize on the subject; he had had great success in extending the jurisdiction of the admiralty; he was fond of glittering generalities; and he was possessed by a restless vanity. All these things conspired to produce the result.”

It may be thought that in this catalogue of Professor Gray’s nothing has been omitted. But nevertheless there is an additional factor which perhaps had some importance. At the time of Swift v. Tyson, and indeed until 1875, the jurisdiction of the lower Federal courts had not been extended by Congress to include cases arising under the laws or Constitution of the United States. Apart from special subjects such as admiralty, the jurisdiction of the lower Federal courts was confined to cases based on diversity of citizenship. In such cases there was obviously little opportunity for a Federal judge to exercise the legal talents which he might possess unless he was free to do more than echo the "last breath" of a state judge. It is interesting also to recall that Justice Story went so far as to maintain that there was a Federal common law of crimes enforcible in the Federal courts apart from Federal statutes. This, however, did not receive the acceptance of his brethren.(n3) But with respect to a Federal common law in civil matters, Justice Story's view prevailed.

III

Thus was launched the rule of Swift v. Tyson. From the beginning the rule was marked by certain logical inconsistencies. For example, while the "laws" of the several States meant the statute laws, they were said to include also decisions construing state statutes, and also decisions which might he regarded as having the force of local usage in local matters. On purely linguistic grounds it is hard to understand why decisions of a certain class should be included within the term "laws" while decisions of another class should not.

The aftermath of the rule was, however, even more remarkable than its origin. The newly announced power of the Federal courts to disregard the decisions of a state grew by what it fed on. One field which might have been thought to be typically local, and so exempt from the rule of Swift v. Tyson, was the construction of wills and the determination of title to real property. Even here, however, the Federal courts asserted their independence. In Lane v. Vick, 3 How. 464 (1845), the Supreme Court had before it a question of the construction of a will dealing with real estate. "It is insisted," the Court said, "that the construction of this will has been conclusively settled by the Supreme Court of Mississippi" (p. 476). The Court then declared: "With the greatest respect, it may be proper to say, that this court do not follow the state courts in their construction of a will or any other instrument, as they do in the construction of statutes" (ibid.).

Suppose, however, that there was in fact a state statute affecting title to real estate. Even in this situation the Court for a time declined to follow state decisions. In Williamson v. Berry, 8 How. 495 (1850), an action in ejectment, the question was presented of the validity of a conveyance by a trustee of real property which had been approved by Chancellor Kent pursuant to a series of private acts of the New York Legislature authorizing conveyances of the property with the approval of the chancellor. The legislation and the conveyance took place in 1816-1817. The highest courts of New York, in proceedings involving this land, had sustained the validity of the conveyance as being in accordance with the private acts, and these decisions were concurred in by Chancellor Walworth, Kent’s successor, who had presided as chancellor for almost twenty years. These decisions were rendered in 1836 and 1838. Then in 1850 the case of Williamson v. Berry, involving the same land, reached the Supreme Court of the United States. That Court held that Chancellor Kent had misconstrued and exceeded the authority granted by the private acts, and that the decisions of the New York courts should not be followed. Mr. Justice Wayne, speaking for the Court, said (p. 543) :

". . . we cannot admit that the rule hitherto observed in the court, of recognizing the judicial decisions of the highest courts of the states upon state statutes relative to real property as a part of local law, comprehends private statutes or statutes giving special jurisdiction to a states court for the alienation of private estates."

Thereafter the New York courts adhered to their former decisions and the conflict in the state of titles to the land was intensified. Finally, in 1860, forty-four years after the conveyances in question, the Supreme Court was again presented with the question in Suydam v. Williamson, 24 How. 427, and at this juncture the Supreme Court receded from its former views and decided to follow the views of the New York Courts.

Where the question was not one of the construction of wills or title to real estate, the Federal courts felt even freer to disregard state decisions, and to do so even though there was a state statute on the subject. In Watson v. Tarpley, 18 How. 517 (1855), an action on a bill of exchange, the Supreme Court held that the payee was entitled to immediate recourse against the drawer of a bill upon non-acceptance by the drawee, despite a statute of Mississippi which provided that there could be no recovery on a bill against the drawer upon mere non-acceptance but only after payment had been refused at maturity. With respect to the state statute the Court said (p. 521): "a requisition [i.e., requirement] like this would be a violation of the general commercial law, which a State would have no power to impose, and which the courts of the United States would be bound to disregard."

Perhaps the climax was reached iii the Court's treatment of a state constitution. In Rowan v. Runnels, 5 How. 134 (1847), the Court considered whether a constitutional provision of Mississippi, prohibiting the introduction of slaves for sale, served in itself to render unenforcible a contract for the purchase of slaves in Mississippi. In Graves v. Slaughter, 15 Pet. 449, the Court had held that this provision did not make the contract unenforcible and that executory legislation was necessary. The Supreme Court of Mississippi then held the contrary. Faced with the same question in the Rowan case, the Supreme Court refused to alter its construction of the Mississippi Constitution, saying (p. 139):

"Acting under the opinion thus deliberately given by this court, we can hardly be required, by any comity or respect for the State courts, to surrender our judgment to decisions since made in the State, and declare contracts to be void which upon full consideration we have pronounced to be invalid."

Where a state court changed its decision on the construction of a state constitution and overruled prior decisions, a new field was opened up for the independence of the Federal courts in passing upon the same questions. Instead of following the latest decision of the state court, which would be controlling in the state the Federal courts decided to follow the earlier and overruled decisions, if the transaction in question had been entered into before the overruling took place. This is the doctrine of the celebrated case of Gelpcke v. Dobuque, 1 Wall. 175.

This case, together with its sequels, deserves special attention. The facts in the case are well known. Certain Iowa cities and counties had issued bonds for the purchase of stock in railroad companies which were extending their lines westward. The validity of the bonds under the Constitution of Iowa was challenged, and the Iowa court, before the bonds were issued and thereafter, in a series of divided decisions, had sustained the power of the municipalities to issue the bonds and take the railroads' stock. The question, however, appeared not to be regarded as settled, and finally the Supreme Court of Iowa in a unanimous decision overruled the former cases and held the bonds to be invalid and the municipalities not liable to the bondholders. But when non-resident bondholders brought suit in the Federal court and carried the case to the Supreme Court of the United States a contrary judgment was rendered, holding the bondholders entitled to recover. It is important to bear in mind that the case involved no Federal institutional question, no question of the impairment of the obligation of contract by a law of the state. It is clear that the overruling of the decisions by the Iowa court did not contravene the impairment of obligation clause.(n4) It is also important to bear in mind that the case did not involve the power or wisdom of the Court's giving the overruling of its own prior decisions prospective application alone; (n5) the case involved the wholly different question of the treatment which a Federal court should give to the latest decision of a state court where the state court imposed no such limitation on the application of its decision.

The case of Gelpcke v. Dubuque has frequently been stated to involve a fundamental conflict with the philosophy of law underlying Swift v. Tyson.(n6) The conflict involves the age-old question whether judges make the law or simply find and announce the law. Swift v. Tyson rests on the philosophic premise that a court--specifically a state court--does not make the law but merely finds or declares the law, and so its decisions simply constitute evidence of what the law is, which another court is free to reject in favor of better evidence to be found elsewhere. If this conception had been followed in Gelpcke v. Dubuque the result would have been that the latest decision would have been controlling, since it did not create a new law for the future, but instead constituted evidence of what the law had always been in the past.

It is true that this juristic or philosophical inconsistency exists, but I venture to think that in a more realistic sense the case of Gelpcke v. Dubuque marked a logical extension of the doctrine of Swift v. Tyson, enlarging the field of discretion for the Federal courts with respect to the effect to be given to state decisions. As a matter of fact, there is no evidence that philosophical considerations weighed heavily with the Court in deciding Gelpcke v. Dubuque. The evidence is that more practical considerations were controlling. Chief among these was undoubtedly the Court's feeling that an injustice had been done to the bondholders by the state court. This feeling moved Mr. Justice Swayne, writing the majority opinion, to an outburst of rhetoric (pp. 206-207): "We shall never immolate truth, justice, and the law, because a State tribunal has erected the altar and decreed the sacrifice." This language drew from Mr. Justice Miller an equally strong dissent. With a good deal of sagacity he suggested that the Iowa court was not likely to be persuaded to amend its ways by any such rebuke (p. 209) :

"Is it supposed for a moment that this treatment of its decision, accompanied by language as unsuited to the dispassionate dignity of this court, as it is disrespectful to another court of at least concurrent jurisdiction over the matter in question, will induce the Supreme court of Iowa to conform its rulings to suit our dictation, in a matter which the very frame and organization of our Government places entirely under its control?"

This was only the beginning of a most unseemly conflict between the Iowa courts and the Federal courts on the question of municipal bonds. The result was that, whether a bondholder could recover against a municipality depended upon whether he could get into a Federal court by reason of citizenship outside of Iowa. The Iowa courts, as Mr. Justice Miller had prophesied, stood firm in their conviction. They enjoined the taxing authorities of the municipalities from assessing a tax to pay the amount of the bonds. Thereupon suit was brought by non-resident bondholders in the Federal court for a writ of mandamus against local officers to require them to assess a tax sufficient to satisfy prior judgments of the Federal court on these bonds. The Supreme Court of the United States ordered a writ of mandamus to issue. Riggs v. Johnson County, 6 Wall. 166 (1867). More than that, the Supreme Court ordered mandamus to issue to compel the levy of a tax to pay Federal judgments on the bonds even though a statute of Iowa limited the amount of taxes to be levied annually and even though that limitation had already been reached. Butz v. City of Muscatine, 8 Wall. 575 (1869). It was in the latter case that Justice Miller gave vent to the personal suffering which these decisions occasioned him, particularly when he was called upon, sitting at circuit, to enforce the Federal decrees in his own State of Iowa. He said (p. 587):

"These frequent dissents in this class of subjects are as distasteful to me as they can be to any one else. But when I am compelled, as I was last spring, by the decisions of this court, to enter an order to commit to jail at one time over a hundred of the best citizens of Iowa for obeying as they thought their oath of office required them to do, an injunction issued by a competent court of their own State, founded, as these gentlemen conscientiously believed, on the true interpretation of their own statute, an injunction which, in my own private judgment, they were legally bound to obey, I must be excused if, when sitting here, I give expression to convictions which my duty compels me to disregard in the Circuit Court.”

Some new and interesting light has recently been cast on this series of municipal bond cases through the publication of the letters of Mr. Justice Miller (Fairman, Justice Samuel F. Miller, 50 Political Science Quarterly 15 (1935)). Miller knew from his own experience in Iowa before his appointment to the bench that justice was not wholly on the side of the bondholders in these cases, for the securities were of questionable validity from the outset; their issuance was often induced by ways that were dark, and frequently they came into the hands of financial speculators. While he was on the bench Justice Miller wrote to his brother-in-law who was coming to argue a municipal bond case from Texas (January 13, 1878, quoted in Fairman, p. 32):

"On what I consider the strongest point in your case, the limitation of the power of the city to issue the bonds or to contract the debt, no member of the court hesitates a moment except Field and myself. And the feeling has [two words illegible] the court against all municipalities who contract any asserted obligation in them amounts to a mania. If I were a practicing lawyer today, my self respect, knowing what I do of the force of that feeling, would forbid me to argue in this court case whatever against the validity of a contract with a county, city or town under any circumstances whatever. It is the most painful matter connected with my judicial life that [I] am compelled to take part in a farce whose result is invariably the same, namely to give more to those who have already, and to take away from those who have little, the little that they have."

After the argument of the case Miller again wrote to his brother-in-law (February 3, 1878, Fairman, pp. 32-33):

"Our court or a majority of it are, if not monomaniacs, as much bigots and fanatics on the subject as is the most unhesitating Mahemodan [sic] in regard to his religion. In four cases out of five the case is decided when it is seen, by the pleadings that it is a suit to enforce a contract against a city, or town, or a county. If there is a written instrument its validity is a for[e]gone conclusion.”

These letters, to put it mildly, strengthen the inference that in deciding these cases the Court was moved less by philosophic considerations of the nature of law and of judicial decisions than by views of practical justice and notions of the rightful power of Federal courts.

One more notable instance of the conflict created by Swift v. Tyson, even where state statutes were involved, is the well-known decision in Burgess v. Seligman, 107 U. S. 20. That case was an action by a judgment creditor of a dissolved Missouri railroad corporation against J. and W. Seligman & Co, as stockholders. A Missouri statute provided that stockholders of dissolved corporations were liable for corporate debts, except that persons holding stock as trustees, pledges or executors should not be liable, in which case the pledgor, grantor or estate should be liable. The Seligmans held $6,000,000 worth of stock pledged to them by the railroad corporation itself, and they voted the shares as stockholders. The question arose whether they were entitled to exemption under the Missouri statute as pledges, in view of the fact that the corporation as pledgor was not in the position of an outside pledgor who would be liable on his stock for the debts of the dissolved corporation. When the case was tried in the lower Federal court no Missouri decision had construed the statute in this regard. But before the case reached the Supreme Court on appeal, the Missouri Supreme Court had held that the Seligmans were liable to the creditors, the statute being construed not to exempt pledges of the corporation itself. The United States Supreme Court declined to follow the state decision on the ground that as it had not been rendered when the case was decided by the lower Federal court it was not controlling.

It is evident, of course, that in these matters of commercial law, involving the validity of bonds and the liability of stockholders, the independence of the Federal courts created conflict in the name of uniformity. The same was true in the filed of tort liability. The doctrine of Swift v. Tyson assumed dominion here, too. The result depended in any case on whether the action could be brought in a Federal court, if the rule there was more favorable to the plaintiff, or could be removed to a Federal court if the rule there was more favorable to the defendant.

Characterizing this state of affairs, George Wharton Pepper observed, writing in 1889, that:

"Of two persons sitting in the same seat in a train, and injured in the same accident, one can recover in damages and the other cannot. Surely this state of things approaches very nearly to that which has excited much comment among eminent jurists, who tell us that so great was the mingling of nations and national laws after the downfall of the Roman Empire, that of four men sitting on the same bench each was presumably governed by a different law." (Pepper, The Border Land of Federal and State Decisions, p. 65.)

IV

To what extent, despite these conflicts, the rule of Swift v. Tyson did tend to promote uniformity is a problem that is hardly susceptible of statistical proof. It is clear, at any rate, that the doctrine promoted a good deal of litigation.(n7) The Federal Digest, through the 1937 volume, contains over 300 columns of notations on the general subject of "State laws as rules of decision in Federal courts." As far back as 1888 Judge George C. Holt of New York published a volume entitled Concurrent Jurisdiction of the Federal and State Courts, in which one chapter, dealing with more than twenty-five subjects, was devoted to the topic "Grounds of Preference Between United States Circuit Courts and State Courts, Growing Out of Diversity of Decisions."

Perhaps the chief beneficiaries of the doctrine of Swift v. Tyson were corporations doing business in a number of states. Such corporations could claim to be citizens of the state of their charter alone, and so when sued could remove cases freely to the federal courts on the ground of diversity of citizenship.(n8) Where the corporation was the plaintiff, it likewise had an advantage. A Delaware corporation suing a New York citizen with respect to a transaction in New York could bring suit there in either the federal or state court; even though diversity of citizenship existed, the defendant could not remove, being a citizen and resident of the state where suit was brought.

Some interesting figures concerning the recourse of insurance companies to the Federal courts were presented in March, 1932, at the Hearings before a Sub-committee of the Senate Committee on Judiciary, dealing with proposed bills to limit the jurisdiction of the Federal courts. The Association of Life Insurance Presidents submitted a memorandum showing the extent to which legal reserve life insurance companies were engaged in litigation in the Federal courts from 1927 through 1931. The figures show that of a total of 17,777 cases for the period 1,119 were litigated in the Federal courts. Of the latter, 99 were originally brought in the Federal courts against the companies, 488 were originally brought in the Federal courts by the companies and 542 were removed to the Federal courts by the companies.(n9) While the percentage of Federal litigation is comparatively small, the actual number of cases in the Federal courts as shown by these figures is fairly impressive. Moreover, the figures do not show to what extent the cases in the state courts were not susceptible of removal to the Federal court either because of lack of diversity jurisdiction or because the amount claimed was less than $3,000. The figures do not show to what extent claimants voluntarily reduced their claim to $2,999 to escape removal. Nor do the figures show the number of claims settled out of court on the basis of the probability that the case would be removed to a Federal court where the decision would be unfavorable to the claimant.

In considering the extent to which uniformity may have been promoted, account must be taken of other factors than the rule of Swift v. Tyson. State courts may be brought into harmony with one another by recourse to exposition of the law in semi-authoritative treatises; or by common training of lawyers and judges in modern law schools; or by the work of organizations like the American Law Institute and the Commissioners on Uniform State Laws.(n10)

But even if it could be shown that uniformity in rules of law was promoted by the practice of the Federal courts, that conclusion would not establish that Swift v. Tyson was a sound or wise doctrine. There remains the further and fundamental question whether the making of uniform rules of law should be entrusted to the Federal judiciary in the fields where the national legislature is powerless to act.(n11) It is not merely that the legislature is entitled to share at least equally in the law-making process. The most serious objection is that the national legislature was powerless to alter rules of law after they were declared by the Federal courts in such matters as ordinary commercial law and torts. Many of those who praised the rule of Swift v. Tyson failed to appreciate this anomaly. Consider, for example, the statement of John Bassett Moore (International Law and Some Current Illusions, p. 333):

". . . There are subjects in respect of which, in spite of the fact that national legislation does not deal with them, the general convenience calls loudly for uniformity. This is particularly the case in regard to the law relating to commercial matters. For this reason, I confess I have always considered the conception of the Supreme Court of the United States in Swift v. Tyson as essentially sound."

The need for uniformity has never been allowed to operate as a basis of power in Congress, which was not granted in the Constitution, and it is hard to see why it should supply power, otherwise not granted, to the Federal judiciary.

The anomaly was particularly striking in the case of the law of insurance. At the very time when the Federal courts were announcing or making rules of law with respect to the construction and enforcement of insurance contracts, the Supreme Court refused to reconsider its long-standing decision that insurance is not commerce. New York Life Insurance Co. v. Deer Lodge County, 231 U. S. 495. Thus the making of insurance law was held to be within Federal judicial power, but not within Federal congressional power.

The anomaly was also striking in the field of torts. When Congress attempted in the First Employers’ Liability Act to modify the common law rules of liability of carriers, particularly with respect to fellow-servant doctrine, the legislation was held unconstitutional because it failed to limit its application to carriers and employees engaged in interstate commerce at the time of the injury. First Employers' Liability Cases, 207 U. S. 463. Subsequently a new statute was enacted which made the required distinction and which was upheld. 223 U. S. 1. The result has been a ceaseless flow of litigation under the statute to determine whether particular employees were or were not engaged in interstate commerce at the moment of injury, a question which frequently depends on almost fantastic distinctions. At the time that these legislative efforts were thus drawn in question the Federal courts were establishing their own rules regarding the scope of the fellow-servant doctrine in tort cases, including cases involving railroads. The authority of the Federal courts to establish these rules did not, of course, depend on any showing that interstate commerce was involved; diversity of citizenship was sufficient. It was in one of these fellow-servant cases, Baltimore & Ohio Railroad v. Baugh, 149 U. S. 368, 403, that Mr. Justice Field delivered a trenchant dissent from the whole doctrine of Swift v. Tyson, declaring:

"I cannot permit myself to believe that any such conclusion, when more fully examined, will ultimately be sustained by this Court. I have an abiding faith that this, like other errors, will, in the end 'die among its worshipers.' "

There is a certain measure of poetic justice in the fact that it was in another case involving the liability of a carrier for negligence that the doctrine of Swift v. Tyson did indeed "die among its worshipers.”

V

The considerations which have been outlined seem ample justification for the overruling of Swift v. Tyson as a matter of wise judicial judgment. The Court, however, relied on a reconsideration of the meaning of Section 34 of the Judiciary Act of l789, and a reconsideration of the constitutional basis for the doctrine.

As to the statutory question, attention was called by the Court to the researches of Mr. Warren on the origin of Section 34 and its revision by Ellsworth prior to passage. See Warren, New Light on the History of the Federa1 Judiciary Act of 1789, 37 Harv. L. Rev, 49, 85-88. The discovery by Mr. Warren of the history of this section had, however, been brought to the attention of the Court in the Black and White Taxicab case (276 U. S. 518) and was not then regarded as sufficient to overturn the construction of Section 34 which had been given by Justice Story.(n12)

With respect to the constitutional argument, it may be observed that the question was not argued to the Court and no new discoveries had been made which explain the reversal, on constitutional grounds, of a century of practice. If the constitutional issue had been argued, the Court would have had to consider the interesting question whether its decision undermines the foundations of the rule of uniformity in maritime law, which also depends on a simple grant of jurisdiction to the Federal courts in the Constitution.(n13)

All of which suggests that the Court might well have avoided resort to statutory or constitutional grounds, and placed its decision solely on grounds of sound practice for the Federal courts. The Court might have adhered to the century-old view that the term "laws" in Section 34 meant only statute laws; but the way was still open to establish a consistent practice of following state decisions even though Congress did not compel the Federal courts to do so. This would have been similar to what the Court did in 1923, when it decided of its own accord to follow state laws in equity cases, even though the requirement in Section 34 referred only to actions at common law. Mason v. United States, 260 U. S. 545.(n14) And the view might have been retained that the course of practice pursued for a hundred years was not unconstitutional; but the way was still open to hold that it had been proved unwise. In short, a rule might have been announced comparable to the rule of judicial practice that constitutional questions will not be decided unless necessary to a disposition of the case. As Swift v. Tyson and its descendants were a product of judicial self-government, so their extinction could have been accomplished appropriately by an exercise of the same power. Instead, the Court chose to confer the role of executioner on the Constitution, holding that the result was compelled by our fundamental charter itself.

In so doing the Court in effect has declared that thousands of decisions of Federal courts, no longer subject to correction, have done what, in the case of legislative action, is called usurping the powers of the states and taking the property of A and giving it to B without constitutional authority. The Court in effect has declared that hundreds of judges have done daily what, in the case of administrative officers, is called exercising an unlawful discretion, having no regard to the standards which must confine their judgment. In the face of an acknowledgment so bold in its frankness and so breath-taking in its implications, perhaps the highest tribute that can be paid to the overruling of Swift v. Tyson is that which was offered up by the usually sedate Harvard Law Review, which saluted "the gratuitous courage of the Court and the fluidity of the Constitution."(n15)

n1) 3 Wash. 313.

n2) Peters was later removed from office as Reporter by a divided Court, with much bitterness of feeling among the Justices. See 2 Warren, Supreme Court in U.S. History, 106-107.

n3) In United States v. Coolidge, 1 Wheat. 415, (1816) the Attorney General declined to argue the point, stating that it had been settled against the Government in United States v. Hudson 7. Cranch 32. Justice Story interposed, "I do not take the question to be settled by that case.” Justice Johnson then said, “I consider it to be settled, by the authority of that case.” The Attorney General agreed with Justice Johnson, and the Court adhered to its prior decision.

n4) This was expressly held in Railroad Co. v. McClure, 10 Wall. 511, in which the Court dismissed for want of a Federal question an appeal from the state court which had held the bonds invalid. See also, to the same effect, Tidal Oil Co. v. Flanagan, 263 U. S. 444.

n5) This question will be before the Court on the petition for rehearing in the Port of New York Authority case, Helvering v. Gerhardt, No. 779, 1937 Term.

n6) E. G. Holmes, J., dissenting, in Kuhn v. Fairmont Coal Co., 215 U. S. 349, 370-372; Gray, Nature and Sources of the Law, secs. 535-550; Rand, Swift v. Tyson versus Gelpcke v. Dubuque, 8 Harv. L. Rev. 328.

n7) Charles Warren states (Supreme Court in United States History, II, p. 532) that in the thirty years following Gelpcke v. Dubuque approximately 300 municipal bond cases came before the Supreme Court—a larger number than on any other subject. Of these cases 65 arose in Illinois, 50 in Missouri, 25 in Iowa, 22 in Kansas, 18 in Wisconsin, 14 in New York, 11 in Indiana, 9 each in Kentucky and Tennessee, the others being scattered over 18 States.

n8) Cf. Frankfurter, Distribution of Judicial Power between United States and State Courts, 13 Cornell L. Q. 499, 524. If the rule of the federal courts appeared to be more favorable to the plaintiff, he was obliged, because of the venue requirements, to sue in the federal district court at the place where the corporation was chartered. This was done in the Tompkins case.

In 1932 Attorney General Mitchell sponsored a bill which would have taken away diversity jurisdiction in suits between a resident of a state and a corporation, which were brought within that state and arose out of the business carried on therein. See Hearings before a Sub-Committee of the Senate Judiciary Committee, 72d Cong., 1st Sess., on S. 937, p. 3. Both this bill and a bill to eliminate diversity jurisdiction entirely were disapproved by this Association’s Committee on Jurisprudence and Law Reform, two members dissenting. 57 A. B. A. Rep. 100, et seq. (1932).

n9) These figures are cited in Yntema, Jurisdiction of Federal Courts in Controversies Between Citizens of Different States, 19 A. B. A. J. 149, 151, note. The slight discrepancy in the total appears in the report of the hearings.

n10) Cf. Shulman, The Demise of Swift v. Tyson, 47 Yale L. J. 1336, 1349 (June 1938).

n11) Cf. Dobie, Seven Implications of Swift v. Tyson, 16 Va. L. Rev. 225, 234; Hornblower, Conflict Between Federal and State Decisions, 14 Am. L. Rev. 211, 226.

n12) Instead of the phrase "the laws of the several States," contained in Section 34, the original draft employed the phrase "the Statute law of the several States in force for the time being and their unwritten or common law now in use, whether by adoption from the common law of England, the ancient statutes of the same or otherwise." The inference has been drawn that the condensation of the phrase was a matter of form only and that the original draft expressed the legislative intent. It is arguable, however, that the change was one of substance, intended to eliminate the unwritten law from the scope of the section, and to substitute "laws" for "statute law" in order to include state constitutions. The latter explanation of the term "laws" was in fact advanced by counsel for the plaintiff in Swift v. Tyson (16 Pet. at 5).

n13) Southern Pacific Co. u. Jensen, 244 U. S. 205,; Knickerbocker Ice Co. v. Stewart, 253 U. S. 149; Washington v. Dawson & Co., 264 U. S. 219.

Some practical consequences of the decision have already emerged. The Supreme Court an May 31, 1938, was obliged to amend its Rules to eliminate as a ground for granting certiorari the fact that a decision of a circuit Court of Appeals is in conflict with the weight of authority on a question of "general law.” In an opinion by Mr. Justice Reed, the Court has pointed out that counsel and Federal courts "must now search far and apply the entire body of substantive law governing an identical action in the state courts." Ruhlin v. New York Life Ins. Co., decided May 2, 1938. It is not settled whether the Federal courts may apply their own rules of conflict of laws to determine what state law governs a transaction. Distinctions between substance and procedure will be of fundamental importance in the Federal courts.

n14) In recent years the Court had in fact shown a tendency to follow state decisions rather than the rule of Swift v. Tyson. See Willing v. Binenstock, 302 U. S. 272, 275. See also Hawks v. Hamill, 288 U. S. 52; Burns Mortgage Co. v. Fried, 292 U. S. 487; Marine Bank v. Kalt-Zimmers Co., 293 U. S. 357; Mutual Life Ins. Co. v. Johnson, 293 U. S. 335 (in the first three of which the decisions of the Circuit Court of Appeals were reversed). Compare, however, Boseman v. Insurance Co., 301 U. S. 196, 203-204; Bergholm v. Peoria Life Ins. Co., 284 U. S. 489.

n15) May, 1938, p. 1245