Section 34 of the Judiciary Act of 1789 provided that in diversity cases at common law the laws of the several States should be the rules of decision in the United States courts. However, in Swift v. Tyson[536] the Supreme Court refused to apply this section on the ground that it did not extend to contracts or instruments of a commercial nature, the interpretation of which therefore ought to be according to "the general principles and doctrines of jurisprudence"; and while the decisions of State courts on such subjects were entitled to and would receive attention and respect, they could not be conclusive or binding upon the federal courts.[537]
Extension of the Tyson Case
For ninety-six years the Court followed this opinion, which the other Justices saw only the evening before it was delivered, and which invoked a precedent of Lord Mansfield on the law of the sea and an epigram of Cicero on the law of nature.[538] Later decisions expanded the concept of matters of a commercial nature so that the scope of the Tyson rule was greatly extended.[539] In many instances the State courts followed their own rules of decision even when contrary to the federal rules, so that Justice Story's attempt at uniformity in matters of a commercial nature paradoxically led to a greater diversity and to the mischief in many instances of two conflicting rules of law in the same State, with the outcome of suits dependent upon whether the case was docketed in a State or a federal court. Simultaneously, the Supreme Court was holding under the Tyson rule that the federal courts were not bound by decisions of State courts interpreting State constitutions[540] or State statutes.[541]
The Tyson Rule Protested
Moreover, decisions extending the scope of the Tyson rule were frequently rendered by a divided Court over the strong protests of dissenters.[542] In Baltimore and Ohio R. Co. v. Baugh,[543] which further projected the Tyson rule into the law of torts in disregard of State law, Justice Field wrote a sharp dissent in which he indicated an opinion that the Supreme Court's disregard of State court decisions was unconstitutional. Such disregard, nevertheless, was further aggravated in Kuhn v. Fairmont Coal Co.,[544] where the Court held that in construing a contract in a case involving real estate and mining law a federal court was not bound by a West Virginia decision touching the same subject. This evoked a provocative dissent from Justice Holmes, who later wrote one of his more famous dissents in the Black and White Taxicab Company case,[545] in which he asserted emphatically that the Court's extensions of the Tyson rule were unconstitutional.[546]
ERIE RAILROAD CO. v. TOMPKINS; TYSON OVERRULED
Increasing criticism of the Tyson rule led to a restriction of it in Mutual Life Ins. Co. v. Johnson,[547] where the Court chose to apply Virginia decisions rather than exercise its independent judgment on the ground that the case was "balanced with doubt."[548] The federal judicial power was subordinated to what Justice Cardozo called "a benign and prudent comity."[549] Four years later, and without further preparation other than a change in two of the Justices, the Court overturned Swift v. Tyson and its judicial progeny in Erie Railroad Co. v. Tompkins,[550] in an opinion by Justice Brandeis which is remarkable in a number of ways. In the first place, it reversed a ninety-six year old precedent which counsel had not questioned; secondly, for the first and only time in American constitutional history, it held action of the Supreme Court itself to have been unconstitutional, to wit, action taken by it in reliance on its interpretation of the 34th section of the Judiciary Act of 1789, a question which also was not before the Court; and thirdly, it completely ignored the power of Congress under the commerce clause, as well as its power to prescribe rules of decision for the federal courts in the cases enumerated in article III.
Like the Fairmont Coal and Taxicab cases, the Tompkins Case presented the possibility of a head-on conflict between State and federal rules of decision. Tompkins was seriously injured by a passing freight train while he was walking along the railroad's right of way in Pennsylvania. As a citizen of Pennsylvania, Tompkins could have sued in that State, but he could also have sued in the federal district court in Pennsylvania, or in New York because the railroad was incorporated in the latter State. He elected to sue in the federal court for the southern district of New York, where he obtained a verdict for $30,000 after the trial judge had ruled that the applicable law did not preclude recovery. The circuit court of appeals affirmed the judgment because it thought it unnecessary to consider whether the law of Pennsylvania precluded recovery, inasmuch as the question was one of general law to be decided by the federal courts in the exercise of their independent judgment. Citing Warren's discovery that Swift v. Tyson was an erroneous interpretation of the Judiciary Act of 1789, criticism of the Tyson doctrine both on and off the bench, and the political and social defects of the rule in working discriminations against citizens of a State in favor of noncitizens and in producing injustice and confusion, Justice Brandeis declared: "If only a question of statutory construction were involved, we should not be prepared to abandon a doctrine so widely * * * [followed for] nearly a century. But the unconstitutionality of the course pursued has now been made clear and compels us to do so. * * * There is, [he continued], no federal general common law. Congress has no power to declare substantive rules of common law applicable in a State whether they be local in their nature or 'general,' be they commercial law or a part of the law of torts. And no clause in the Constitution purports to confer such a power upon the federal courts."[551] After quoting Justice Field and Justice Holmes on the unconstitutionality of the Tyson rule, Justice Brandeis made it clear that the Court was not invalidating § 34 of the Federal Judiciary Act of 1789, but was merely declaring that the Supreme Court and the lower federal courts had, in their application of it, "invaded rights which * * * are reserved by the Constitution to the several States."[552]
Justice Butler, joined by Justice McReynolds, concurred in the result, because in his view Tompkins was not entitled to damages under general law, but he deprecated the reversal of Swift v. Tyson. He also objected to the decision of the constitutional issue as unnecessary.[553] Justice Reed likewise concurred, but thought it questionable to raise the constitutional issue. "If the opinion, [said he], commits this Court to the position that the Congress is without power to declare what rules of substantive law shall govern the federal courts, that conclusion also seems questionable."[554]
Extension of the Tompkins Rule