In Smith v. Alabama (124 U. S. 465; 8 Sup. Ct. Rep. 504; 31 L. ed. 508) the court say: "A determination in a given case of what that [common] law is may be different in a court of the United States from that which prevails in the judicial tribunals of a particular State. This arises from the circumstances that the courts of the United States, in cases within their jurisdic-tion where they are called upon to administer the law of the State in which they sit, or by which the transaction is governed, exercise an independent,
The doctrine of Swift v. Tyson has become so well established that there is little utility in questioning its abstract correctness. Several points may, however, be adverted to. First, it may be pointed out that its effect is to substitute law of federal creation (or at least federal judicial determination) for the state law with reference to matters which by the federal Constitution are left within the exclusive legislative power of the State.
Second: it may well be questioned whether there exists any "general commercial law," such as the Supreme Court asserts to exist, and which it claims not itself to create but to find in existence, and to apply in place of the local peculiar law as laid down by the state courts.
In fact it would seem, as appears from the opinions of the Supreme Court, that a conceived convenience has been the real force leading the court to its position upon this point. And even as to this it may be doubted whether general commercial convenience is greatly advanced by a result which makes the law of a particular case depend in many instances upon the particular court - state or federal - in which it happens to be brought.41
Finally, it is to be observed that the doctrine of Swift v. Tyson, however correct in principle, by no means furnishes a means whereby a uniform code of commercial law for the entire United. States may be developed. In the first place, as already pointed out, such decisions as are declared under it are controlling only in the federal courts. The state courts still remaining free to adopt them or reject them as they see fit.42 In the second place the doctrine is applicable in the federal courts themselves only though concurrent, jurisdiction, and are required to ascertain and declare the law according to their own judgment. This is illustrated by the case of Mew York C. R. Co. v. Lockwood (17 Wall. 357; 21 L. ed. 627), where the common law prevailing in the State of New York in reference to the liability of common carriers for negligence received a different interpretation from that placed upon it by the judicial tribunals of the State; but the law as applied is none the less the law of that State."
41 See generally in criticism of Swift v. Tyson, Hare's American Constitutional Law, Lecture LI.
42 Delmas v. Merchants' Mutual Ins. Co., 14 Wall. 661; 20 L. ed. 757. Professor Schofield questions whether it was necessary to admit this right of the state courts. See Illinois Law Rev. IV, 547.
with reference to those questions of commercial law upon which there is in the State whose law is involved, no defining statute, or well-established local usage. Thus whatever may have been the doctrine adopted by the federal courts as deducible from the principles of general commercial law, it could not apply in a State in which a statute or well-established usage prescribes a different one. In other words, the doctrine of Swift v. Tyson goes no farther than to permit the federal courts to disregard those decisions of state courts which have themselves been founded, not upon statute or usage, but upon the abstract principles of general commercial law.
Summing up the discussion of the topic of the federal courts and state laws, it is apparent that in a number of directions the federal courts, while deriving jurisdiction from the nature of the parties but presumably applying state law, have in fact built up for themselves a considerable body of law which is neither laid down in the federal Constitution, treaties, and laws of Congress nor in conformity with the laws of the States as determined by their respective judicial tribunals.
Whether this body of law may properly be termed federal common law may possibly be questioned. It is unquestionably federal in the sense that it owes its authority to, and is applied by, the federal courts; and it is common in that it may be enforced by the federal courts throughout the Union. There is, however, good reason for holding that it is essentially state law. The fact that it differs from the law as laid down by the state courts is due to the peculiar circumstance that, under our judicial system, two co-ordinate sets of courts have the power to interpret and determine the common law of the several States. In other words, the federal courts have taken the position that, when sitting for the enforcement of state laws, they do not sit as tribunals subordinate to the state courts, but as tribunals co-ordinate with them ; and that, therefore, they have an independent right to determine what is the non-statutory law of the State, using for that purpose the same sources of information that the state courts use in determining for themselves the same facts.