This section is from the book "Science Of Legal Method", by Ernest Bruncken. Also available from Amazon: Science of Legal Method.
We now proceed to the second problem with which we are to occupy ourselves. That is the question of the manner in which the English courts are able to influence the legal development of their country by their decisions. This is indeed the most important feature of their lawmaking functions. As stated in the beginning, the rule is that the decisions of certain courts are binding on other courts. Consequently these decisions, within certain limits, do not merely establish rights between the parties in the case at bar, but are general rules having enduring effects beyond the particular case. Except where they simply reaffirm existing rules, they do actually make new law. These creative decisions taken together form what is known as case-law, which is a distinct species of law standing between statute law on the one side and the common law (meaning the traditional customary law) on the other.
Now, if we look closer into the question of how a decision may be at the same time an act of legislation, we shall have to start from the principle that existing law cannot be changed by the decision of a court. That is true equally with regard to statutory and to customary law. It follows that decisions merely supplement existing law. It makes new law by filling gaps, but where law already exists, the decision can be declaratory only, never constitutive. As far as this goes, the English judges are
10 [Several paragraphs of the text and notes, omitted in translation, contain a description of the manner in which the rules may be adopted, and form be given to them.-Transl.] as completely bound by the law as ours. The great principle of the constitution of our courts, according to which the independence of the judge is limited by the law, is in force in England in precisely the same manner as with us. However, the court, in declaring what the law is, must determine how it is to be interpreted, and to that extent the decision is binding. Accordingly, every decision is, within limits to be stated presently, an authoritative interpretation, and being such, ceases to be merely declaratory, and becomes an act of creative lawmaking. Moreover, in interpreting the law, the very important principle is recognized that the courts will not apply a rule to such an extent as to lead to absurd consequences.11 We cannot doubt for an instant that by such a rule the judge is actually raised above the law. While with us the maxim is unconditionally adhered to that "lex falsa lex est,"12 in England the principle is that the court will rectify the absurd rule, and the maxim would read: "lex falsa non lex est."
In order to determine to what extent a decision makes law, we must ascertain the relation of the various courts to each other. For the fundamental rule is not by any means that every decision expressing a new rule has lawmaking force to an unlimited extent. It is only the decisions of superior courts that are binding on the courts inferior to them.13
11 Comp. the detailed treatment of this matter in Hatschek, "Englisches Staatsrecht," vol. i, pp. 138 seq.
12 This rule is the law in spite of all the adherents of free legal decision may say against it. Their arguments refer merely to what they desire the law should be, not what it is. From the most fundamental principle of every State based on law it follows that every activity of the State must be founded on some authority given by law. There can be no appeal from the law itself.
13 A brief synopsis of the principles regulating this matter will be found in Hatschek, "Englisches Staatsrecht," pp. Ill seq.
From this rule, that none but a superior court can bind the inferior one by its decisions, the further important rule is derived that, as a matter of principle, a court is not bound by its own decisions However, while this rule is true of the most important of English courts, the High Court of Justice, it is not true of the Court of Appeal and the House of Lords. In regard to these, the rule is as follows: the Court of Appeal is bound both by its own decisions and by those of courts now abolished which were of equal rank with itself. In other words, the Court of Appeal [sitting in bank] is unable to overrule itself [unless the decision was arrived at by the casting vote of the presiding justice]. The rule is still stricter in the House of Lords, which cannot overrule itself at all, so that a rule once established by it can be changed only by statute.
Amendment of case-law by statute is possible without limitations, of course. It is not possible, however, to change case-law by custom, and it must be distinctly understood that a rule does not lose any part of its binding power by mere lapse of time, no matter how long ago the decision was rendered. As a matter of fact, we may observe that decisions a hundred and more years old may be decisive of a case at the present day, which appears a very strange thing indeed.