We shall find that along certain lines there is a well developed federal common law.

The federal written law (constitution, statutes, and treaties) does not and cannot constitute in itself a complete system of law, but is fragmentary and covers only a portion of the great range of subjects with which a court of justice may be called upon to deal, and these often only partially, and much of the law administered by the federal courts comes from other sources. Thus in many of the cases in the federal courts no question of federal law at all is involved, but the jurisdiction of the court depends upon the citizenship or character of the parties. In some cases the law involved is the statute law of a state, but most of these cases are to be determined wholly or in part by the common law. In thus administering the common law, it is commonly considered that the federal courts are administering not a federal common law, but the common law of the states in which they are sitting. This is undoubtedly true in many cases. Thus, a federal court sitting in New York in a case in which its jurisdiction is derived solely from diversity of citizenship of the parties, as where a citizen of New Jersey is suing a citizen of New York about a matter involving no question of federal law, will administer the law applicable to the case, which in many cases will be the common law of New York.

In administering the common law the federal courts generally follow the decisions of the courts of the state-practically always in matters of purely local interest, as, for example, in matters relating to the title to real property within the state, or the status and relations of persons within state jurisdiction. In this class of cases they are administering state law.1

10

But it frequently happens that the case is one to which the local law of the state is not applicable, and to which also there is no federal written law that can apply. A case involving interstate commerce, which is exclusively 10-See post, § 42.

within federal jurisdiction, and as to which Congress has not legislated, affords a good example. Such cases must be decided by some common law, and plainly this can only be a federal common law. Another example is found in the case of controversies between two states. In such a case the proper law to be applied cannot be the law of either state but must be a law of common recognition, which, of course, can be only a general, or interstate common law, or, in other words, a federal common law. And, by implication, the Constitution in conferring upon the federal courts jurisdiction of controversies between two states must be understood to have conferred upon such courts power to administer the appropriate law to be applied thereto. In a case of this sort it is possible that Congress might have power to legislate under the "necessary and proper" clause of the Constitution, as has been done in cases of admiralty and maritime jurisdiction, for it is not to be supposed that the law governing controversies between two states, or any other controversies to which state law is not applicable and over which Congress is not expressly authorized to legislate, shall be forever unalterable, or alterable only by judicial legislation. But however this may be, the Constitution certainly contemplates that such cases shall be determined according to some law, and where there is no federal written law on the subject, and yet the case is clearly within federal and not state jurisdiction, it would seem to be fairly implied that in extending the judicial power to such cases the Constitution has adopted the principles of the English common law so far as applicable to such cases. This, at least, has been the practical construction by the courts.

The case of Western Union Telegraph Co. v. Call 11 illustrates the first of the above classes. This was a suit brought by a publisher in Nebraska to recover from a 11-Western Union Telegraph Co.

v. Call, 181 U. S. 92.

telegraph company the amount of an overcharge for telegraphic service paid under protest. The company was doing an interstate business but Congress had not regulated the matter of rates, which, of course, it had power to do. As interstate rates cannot be fixed by the law of a state, either its statute law or common law, and there was no federal statute, the company contended that there was no applicable law, and until Congress acted it was wholly uncontrolled in the matter of fixing its rates for service. The Supreme Court held, however, that the case was governed by the common law, which, of course, could be only the federal common law, and the plaintiff recovered. In so holding the court, by Brewer, J., said: "The principles of the common law are operative upon all interstate commercial transactions except so far as they are modified by Congressional enactment."

The second class of cases above suggested is illustrated by the case of Kansas v. Colorado,12 in which the common law of riparian rights was applied in a suit between the two states involving the use of the Arkansas River, an interstate stream. In this case, after reviewing a number of cases involving more or less the recognition of a federal common law, the court said: "In other words, through these successive disputes and decisions this court is practically building up what may not improperly be called interstate common law,"

§ 6. General commercial law. The development of a federal common law by the federal courts in connection with the classes of controversies mentioned in the preceding section involves, it would seem, no usurpation of power. In conferring upon the federal courts jurisdiction of controversies to which no state law can properly apply, the Constitution must be deemed, by implication, to have granted to these courts authority to apply their 12-Kansas v. Colorado, 206 U. S.

own doctrine of common law in the absence of legislation by Congress. And this is true not only in cases in respect to which Congress has power to legislate but has not done so, but also as to cases not subject to Congressional control. There can, therefore, be no objection on constitutional grounds to the administration by the federal courts of a federal common law within the limits indicated.

But where a case falls within the law of a state and comes within the jurisdiction of the federal courts solely because of the character of the parties to the suit, a very different question is presented. Thus where a citizen of one state sues a citizen of another state in a federal court on a cause of action arising under the law of one of these states, it would seem too clear for argument that the law to be applied is the law of such state, and not federal law. And in such case, if the law on the point involved has been settled by the courts of that state, the federal court should apply the state law as so established. However, in a long line of decisions, the Supreme Court, by what seems to be an extraordinary exercise of power, has established a different doctrine. It is well settled that in matters of "general commercial law" the federal courts will exercise an independent judgment, and will decide cases coming before them on the ground of diverse citizenship according to their own notions of the common law, notwithstanding the law has been otherwise settled in the courts of the states in which the causes of action arise.

§ 7. Swift v. Tyson. The case in which this doctrine was first announced was Swift v. Tyson,13 decided in 1842. This was an action by Swift (of Maine) against Tyson (of New York) as acceptor of a bill of exchange drawn in Portland, Maine, upon him and accepted by

13-Swift v. Tyson, 16 Pet. 1.

him in New York City. The bill was drawn to the order of the drawers and was endorsed by one of them to Swift, who took the bill before maturity in payment of a pre-existing debt due to him from the drawers of the bill. The defendant, Tyson, pleaded failure of consideration as between himself and the drawers. Swift claimed that this defense was not good as against him who had received the bill as a holder in due course, for value, and without notice of any equities between the other parties thereto. The question in the case was, whether Swift, having taken the bill in payment of a pre-existing debt, was a holder for valuable consideration, that is, whether a pre-existing debt is a valuable consideration within the law of negotiable instruments. The acceptance having been in New York, it was contended that the contract was a New York contract and governed by the law of New York state.

The Supreme Court reviewed the New York authorities and expressed a doubt whether it was certainly and finally settled that in that state a pre-existing debt was not a valuable consideration. The court by Story, J., then continued: "But admitting the doctrine to be fully settled in New York, it remains to be considered whether it is obligatory upon this court, if it differs from the principles established in the general commercial law. It is observable that the courts of New York do not found their decisions upon any local statute, or positive, fixed, or ancient local usage; but they deduce the doctrine from the general principles of commercial law. It is, however, contended that the 34th section of the Judiciary Act of 1789, c. 20, furnishes a rule obligatory upon this court to follow the decisions of the state tribunals in all cases to which they apply. That section provides 'that the laws of the several states, except where the Constitution, treaties, or statutes of the United States shall otherwise require or provide, shall be regarded as rules of decision in trials at common law in the courts of the United States,