160 PAGES IN FED_RULES OF DECISION ACT-28USC 1652 MY DOCS_SONY
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TITLE 28. JUDICIARY AND JUDICIAL PROCEDURE
PART V. PROCEDURE
CHAPTER 111. GENERAL PROVISIONS
28 USCS § 1652
§ 1652. State laws as rules of decision
The laws of the several states, except where the Constitution or treaties of the
United States or Acts of Congress otherwise require or provide, shall be
regarded as rules of decision in civil actions in the courts of the United States, in
cases where they apply.
HISTORY:
(June 25, 1948, ch 646, 62 Stat. 944.)
HISTORY; ANCILLARY LAWS AND DIRECTIVES
Prior law and revision:
Based on title 28, U.S.C., 1940 ed., § 725 (R.S. § 721).
"Civil actions" was substituted for "trials at common law" to clarify the meaning of
the Rules of Decision Act in the light of the Federal Rules of Civil Procedure. Such
Act has been held to apply to suits in equity.
Changes were made in phraseology.
NOTES:
Related Statutes & Rules:
State laws governing evidence, USCS Federal Rules of Civil
Procedure, Rule 43(a).
Laws of state as including state statutes and state judicial decisions
construing them, USCS Federal Rules of Civil Procedure, Rule 81(e).
Research Guide:
Federal Procedure:
2 Moore's Federal Practice (Matthew Bender 3d ed.), ch 8, General Rules of
Pleading §§ 8.02 et seq.
3 Moore's Federal Practice (Matthew Bender 3d ed.), ch 15, Amended And
Supplemental Pleadings §§ 15.02 et seq.
13 Moore's Federal Practice (Matthew Bender 3d ed.), ch 65, Injunctions and
1
Restraining Orders § 65.07.
14 Moore's Federal Practice (Matthew Bender 3d ed.), ch 81, Applicability of
the Rules in General; Removed Actions § 81.10.
17A Moore's Federal Practice (Matthew Bender 3d ed.), ch 120, Dual State and
Federal Judicial Structure § 120.31.
17A Moore's Federal Practice (Matthew Bender 3d ed.), ch 124, The Erie Doctrine
and Applicable Law §§ 124.08, 124.09, 124.40, 124.43.
18 Moore's Federal Practice (Matthew Bender 3d ed.), ch 133, Intersystem
Preclusion § 133.02.
22 Moore's Federal Practice (Matthew Bender 3d ed.), ch 402, Original
Jurisdiction of Supreme Court § 402.05.
22 Moore's Federal Practice (Matthew Bender 3d ed.), ch 408, Procedural
Framework of Supreme Court Practice § 408.11.
1 Fed Proc L Ed, Access to District Courts § 1:56.
4A Fed Proc L Ed, Banking and Financing § 8:990.
4B Fed Proc L Ed, Banking and Financing § 8:1523.
6 Fed Proc L Ed, Civil Rights § 11:297.
8 Fed Proc L Ed, Courts and Judicial System §§ 20:557, 558, 564, 607.
12 Fed Proc L Ed, Evidence §§ 33:91, 263.
19 Fed Proc L Ed, Indians and Indian Affairs § 46:746.
23 Fed Proc L Ed, Maritime Law and Procedure § 53:4.
29A Fed Proc L Ed, Removal of Actions § 69:113.
Am Jur:
15 Am Jur 2d, Civil Rights § 147.
32 Am Jur 2d, Federal Courts §§ 329, 371.
32A Am Jur 2d, Federal Courts § 633.
57B Am Jur 2d, Negligence § 1191.
Forms:
5 Bender's Federal Practice Forms, Form 24:80, Federal Rules of Civil Procedure.
Annotations:
Federal or state law as controlling in litigation concerning government bonds
or other government paper. 1 L Ed 2d 1583.
Duty of federal court, under Erie R. Co. v Tompkins, to follow, on questions of
state law, decisions or rulings of state courts other than those of last resort. 18 L
Ed 2d 1602.
The Supreme Court and the Post-Erie Federal Common Law. 31 L Ed 2d 1006.
Jurisdiction of Federal Courts Based Upon Diversity of Citizenship Under 28
U.S.C.A. § 1332 [28 USCS § 1332]--United States Supreme Court Cases. 45 ALR
Fed 2d 407.
2
Federal or state law as governing federal court's authority, in diversity action after
Erie R. Co. v Tompkins, to take judicial notice of law of sister state or foreign
country. 7 ALR Fed 921.
Marital privilege under Rule 501 of Federal Rules of Evidence. 46 ALR Fed
735.
Modern status of pendent federal jurisdiction, under 28 USCS sec. 1338(b), over
state claim of unfair competition when joined with related claim under federal patent
laws. 57 ALR Fed 418.
Modern status of pendent federal jurisdiction, under 28 USCS sec. 1338(b), over
state claim of unfair competition when joined with related claim under federal
copyright laws. 58 ALR Fed 875.
Modern status of pendent federal jurisdiction, under 28 USCS sec. 1338(b), over
state claim of unfair competition when joined with related claim under federal
trademark laws. 62 ALR Fed 428.
Pendent jurisdiction of federal courts in actions based on diversity of citizenship.
71 ALR Fed 117.
Pendent jurisdiction of federal court over state claim against party not otherwise
subject to federal jurisdiction where state claim is sought to be joined with claim
arising under laws, treaties, or Constitution of United States ("pendent party"
jurisdiction). 72 ALR Fed 191.
Existence of pendent jurisdiction of federal court over state claim when joined
with claim arising under laws, treaties, or Constitution of United States. 75 ALR Fed
600.
Discretionary exercise of pendent jurisdiction of federal court over state claim
when joined with claim arising under laws, treaties, or Constitution of United States.
76 ALR Fed 46.
Propriety and prejudicial effect of reference by plaintiff's counsel, in jury trial of
personal injuries or death action, to amount of damages claimed or expected by his
client. 14 ALR3d 541.
Duty of federal courts, under Erie R. Co. v Tompkins, to follow decisions of state
courts as regards question of public policy as to recognition or enforcement of rights
or obligations arising in another state, or other questions as to conflict of laws. 21
ALR2d 247.
What law governs employee's right to damages for wrongful discharge. 61 ALR2d
917.
Erroneous decision as law of the case on subsequent appellate review. 87 ALR2d
271.
Federal court's adoption of state period of limitation, in action to enforce federally
created right, as including related or subsidiary state laws or rules as to limitations.
90 ALR2d 265.
Federal court as following law of forum state with respect to privileged
communications. 95 ALR2d 320.
Law Review Articles:
Morgan. The Future of a Federal Common Law. 17 Ala L Rev 10, Fall 1964.
3
Comment, The State Courts and the Federal Common Law. 27 Albany L Rev
73, 1963.
Civil Procedure--Diversity Actions--Conflict Between Federal Rule and State Law
with Direct Substantive Effect. 16 BC Ind & Com LR 852, 1974-75.
Federal Jurisdiction--Diversity of Action--Federal Court Determining State
Law [Waltham Precision Instrument Co. v McDonnell Aircraft Corp., 310 F2d 20]
43 BU L Rev 409, 1963.
Clearfield: Clouded Field of Federal Common Law. 53 Colum L Rev 991, 1953.
Hill. The Law-Making Power of the Federal Courts: Constitutional Preemption. 67
Colum L Rev 1024, 1967.
Weinstein. Reform of Federal Court Rulemaking Procedures. 76 Colum L Rev
905, 1976.
Comment, Erie Limited: The Confines of State Law in the Federal Courts. 40
Cornell LQ 561, 1954-55.
Note, Exceptions to Erie v Tompkins: The Survival of Federal Common Law. 59
Harv L Rev 966, 1945-46.
Note, The Competence of Federal Courts to Formulate Rules of Decision. 77 Harv
L Rev 1084, 1963-64.
Note, The Federal Common Law. 82 Harv L Rev 1512, 1968-69.
Ely. The Irrepressible Myth of Erie. 87 Harv L Rev 693, 1973-74.
Redish; Phillips. Erie and the Rules of Decision Act: In Search of the Appropriate
Dilemma. 91 Harv L Rev 356, 1977-78.
Fletcher. The General Common Law and Section 34 of the Judiciary Act of 1789:
The Example of Marine Insurance. 97 Harv L Rev 1513, May 1984.
Bradley; Goldsmith; Moore. SOSA, Customary International Law, and the
Continuing Relevance of Erie. 120 Harv L Rev 869, February 2007.
Comment, The Invalid Growth of the New Federal Common Law Dictates the
Need For a Second Erie. 9 Houston L Rev 329, 1971-72.
Conflicts of Laws--A federal court, sitting in diversity, held not bound by conflict
of laws rules of the forum state when a false conflict is found to exist. 3 Loy U Chi
LJ 155, 1972-73.
State or federal law in federal courts: the rise and fall of Erie. 42 Miss LJ 89, 197071.
Friendly. In Praise of Erie--And of the New Federal Common Law. 39 NYU L
Rev 383, 1964.
Erie doctrine--tolling effect on statute of limitations of prior pending suit in federal
court is a question of federal law. 50 Tex L Rev 162, 1971-72.
Wellborn. The Federal Rules of Evidence and the Application of State Law in
Federal Courts. 55 Tex L Rev 371, 1976-77.
Civil Procedure--Federal Diversity Suits--The Tolling Effect on State Statutes of
Limitations by the Pendency of an Identical Suit in Another Federal Court is to be
Determined a Matter of Federal, Rather than State Law. 40 U Cin L Rev 148, 1971.
Mishkin. The Variousness of "Federal Law"; Competence and Discretion in the
Choice of National and State Rules for Decision. 105 U Pa L Rev 797, 1956-1957.
Erie, Forum Non Conveniens and Choice of Law in Diversity Cases. 53 Va L Rev
380, March 1967.
4
Diversity Jurisdiction--Rule 13(a) Policy Outweighs State Interest in Door-Closing
Statute Despite Erie. 18 Wayne L Rev 1619, 1972.
Note, Federal Common Law and Article III: A Jurisdictional Approach to Erie. 74
Yale LJ 325, 1964-65.
Law applied in diversity cases: the rules of decision act and the Erie doctrine. 85
Yale LJ 678, April 1976.
Degnan. Federalized Res Judicata. 85 Yale LJ 741, April 1976.
Interpretive Notes and Decisions:
I.IN GENERAL 1. Generally 2. Construction 3. Diversity actions 4.
Actions arising under federal statutes 5. Actions arising in District of Columbia or
in territories and possessions 6. Actions arising outside of state in which federal
court is sitting
II."LAWS OF THE SEVERAL STATES" CONSTRUED
A.In General 7. Generally 8. Commercial law 9. Common law 10.
Executive or administrative decisions or practices 11. Legislative matters
Public policy
12.
B.State Courts Decisions as Determining Law of State 13. Generally 14. Comity
15. Decisions after accrual of rights of parties 16. Dicta 17. Friendly or test
cases 18. State's highest court 19. Intermediate or inferior state courts 20.
State court decisions construing federal constitution 21. State court decisions
construing federal statutes
C.Validity and Construction of State Law
1.Constitutional Matters 22. Construction of state constitution by state courts
23. Validity of state statutes under federal constitution 24. Validity of state
statutes under state constitution
2.State Statutory Law 25. Generally 26. Amended or repealed statutes 27.
Application of state construction of similar statute 28. Construction of same or
similar statute in different state 29. Federal court construction prior to state court
construction 30. State statute enacted to implement federal statutes
3.Absence of State Statute or Decision 31. Generally 32. Decisions by other
federal courts 33. Decisions by other state construing similar laws 34. Decision
by state court after federal court decision 35. Federal question matters
4.Conflicts 36. Generally 37. Conflicting decisions within state courts
State law as conflicting with federal law
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38.
III.APPLICATION OF STATE LAW TO PARTICULAR SUBJECT
MATTER AND PROCEEDINGS
A.Business and Professions
1.In General 39. Generally 40. Attorneys
agencies, boards and commissions
41. Partnerships
42. State
2.Banks and Banking 43. Generally 44. Bank in receivership 45. Powers and
duties 46. Priority of claims 47. Rights and remedies of depositors 48.
Stockholders' liability
3.Corporations
a.Private Corporation 49. Generally 50. Construction of charter, articles
and bylaws 51. Dissolution and receivership 52. Foreign corporations 53.
Stockholders' rights and liabilities
b.Public Corporations 54. Generally 55. Construction of charter 56. Liabilities
57. Powers and duties 58.--Authority to issue warrants 59.--Bonding authority
60.--Debt limitation 61.--Ordinance construction and validity
B.Bonds, Bills and Notes
1.Commercial Paper 62. Generally 63. Alteration 64. Construction and
validity 65. Obligations of United States 66. Transfer; bona fide purchasers
67. Warehouse receipts
2.Bonds 68. Generally 69. Contractors and subcontractors 70. Depository
71. Drainage or irrigation district 72. Interest 73. Mortgage 74. Official 75.
School 76. United States government
C.Contracts
1.In General 77. Generally 78. Accord and satisfaction 79. Capacity to
contract 80. Construction 81.--Alteration or modification 82. Damages 83.
Impairment by states 84. Interest 85. Law of forum 86. Legality; public policy
87. Right of action 88. Seals 89. State of execution or performance 90.
Statute of frauds
2.Particular Contracts or Provisions 91. Arbitration 92. Assignments 93.
Employment 94. Government 95. Guaranty, indemnity and surety 96. Sales
97.--Land 98.--Securities
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D.Domestic Relations 99. Generally 100. Actions by or against husband and
wife 101. Divorce and incidents thereof 102. Illegitimate children 103.
Marriage 104. Property rights
E.Insolvency
1.In General 105. Assignment for benefit of creditors 106. Creditors' suits
107. Reorganization proceedings 108. Receivers and receiverships
2.Bankruptcy 109. Generally 110. Petition 111. Bankrupt estate 112.
Trustees 113. Provable debts and claims 114. Liens and priorities 115.
Voidable transfers 116. Adjudication and discharge
F.Insurance 117. Law governing, generally 118.--Contract provisions 119.-State in which contract is made 120.--State in which property is located or loss
occurs 121. Effect of state statutes, generally 122.--Regulation of insurance
companies or agents 123.--Rights of insured parties or other claimants 124.-Statutes providing rules of construction 125. Construction 126.--Beneficiary
127.--Coverage 128.--Insurable interest 129. Fraud in procurement 130.
Government insurance 131. Payment of premiums 132. Cancellation 133.
Liability of insurer
G.Property
1.In General 134. Adverse possession 135. Boundaries 136.--Public lands
137. Condemnation proceedings 138. Conveyance of property 139.--Deeds
140.--Fraudulent conveyances 141.--Indian lands 142. Duty to adhere to state
property rules 143.--Absence of state court decision 144.--State in which
situated 145.--State statutes 146. Government land claims 147. Homesteads
148. Improvements 149. Injury to real property 150.--Public lands 151. Life
estates and remainders 152. Realty or personalty 153.--Fixtures 154. Riparian
and water rights 155. Suits for recovery of possession of land 156. Taxation
157. Title to lands 158. Use of lands
2.Leases and Leasehold Interests 159. Generally 160. Construction of lease
161. Damages upon breach of lease 162. Indian lands 163. Landlord and tenant
relationship 164. Mineral leases 165. Oil and gas lease 166. Rents and
deposits 167. State of execution or performance 168. Timber leases
3.Mortgages and Liens 169. Chattel mortgages 170.--After acquired chattels
171.--Recording 172. Corporate mortgages 173. Liens 174.--Mechanics and
materialmen 175.--Priorities between lien claimants 176.--Waiver of rights
177.--Real estate mortgages 178.--Right of redemption
H.Taxation
7
1.In General 179. Assessments for public improvement 180. Drainage districts
181. Streets and sidewalks 182. Proceedings for collection of taxes 183.--Lien
for unpaid taxes 184.--Payment from proceeds of judicial sales 185.--Prevention
of assessment or collection 186. Refund or recovery of taxes or penalties 187.-Administrative remedies 188.--Taxes illegally assessed or collected
2.State Taxes 189. Generally 190. Income tax 191. Inheritance tax 192.
Personal property tax 193. Privilege, license or occupation tax 194. Products or
production tax 195. Real property tax 196. Transfer tax
3.Federal Taxes 197. Generally
200. Gift tax 201. Income tax
198. Corporate stock tax
199. Estate tax
I.Torts
1.In General 202. Actions arising under federal liability acts 203. Damages
204. Joint and several liability 205. Law of place where wrong occurred 206.-Conflicting decisions 207.--State decisions in absence of statutes 208. Release
209. Torts arising in master-servant or employer-employee relationship 210. Torts
occurring on navigable waters
2.Particular Matters 211. Generally 212. Assault and battery 213. Failure to
maintain safe premises 214. Libel and slander 215. Medical malpractice 216.
Motor vehicle accidents 217. Negligence, generally 218.--Defenses 219.-Proof 220.--Standard of care required 221. Nuisance 222. Wrongful death
223. Other
J.Wills, Trusts and Estates
1.Wills 224. Generally
228. Probate
225. Construction
226. Contest
227. Execution
2.Trusts and Trustees 229. Generally 230. Assignment of beneficial interest
231. Charitable trusts 232. Testamentary trusts 233. Trust receipts and deeds
3.Decedent's Estates 234. Generally 235. Claims against estate 236.--Time for
presentment 237. Distribution and descent 238.--Dower 239.--Indians 240.
Powers, duties and liabilities of administrator or executor 241.--Liability after
discharge 242.--Sale of property
K.Miscellaneous Subjects and Proceedings 243. Antitrust 244. Civil rights
245. Contempt proceedings 246. Criminal offenses and proceedings 247.
Disputes between states 248. Gifts 249. Guardian and ward 250. Immigration
251. Interstate commerce 252. Labor relations and unions 253. Maritime
matters 254. Patents, copyrights and trademarks 255. Political parties and
activities 256. Pollution 257. Public officers and employees 258. Railroads
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259. Securities regulation 260. Social or religious organization 261. State
exemption statutes 262. Workers' compensation acts 263. Zoning and land use
L.Practice and Procedure
1.In General 264. Appeal 265. Attorneys' fees 266.--Liens and remedies of
attorney 267.--Notes containing provision for attorneys' fees 268. Bonds and
deposits 269. Capacity to sue or be sued 270.--Agents 271.--Assignees
272.--State or political subdivisions 273. Damages 274.--Punitive or exemplary
damages 275. Jurisdiction 276. Pleading and proof 277. Remedies 278.
Removal 279. Right to jury trial 280. Setoff 281. Subrogation 282. Survival
or actions 283.--Death of plaintiff 284.--Death of defendant 285. Other
2.Evidentiary Matters 286. Generally 287. Burden of proof 288. Dead man's
statute 289. Parol 290. Presumptions 291. Prima facie evidence 292.
Privilege 293. Witnesses
3.Judgments 294. Generally 295. Declaratory judgments 296. Default 297.
Dismissal of action 298. Summary judgment 299. Enforcement of judgment,
execution 300. Interest and penalties 301. Parties bound by judgment 302.
Res judicata and collateral estoppel
4.Limitation of Actions
a.In General 303. Generally 304. Commencement of limitation period 305.
Commencement of suit 306. Construction of state limitations statutes 307.
Federal laws 308. Tolling or extension of limitation periods
b.In Particular Actions 309. Generally 310. Admiralty 311. Antitrust 312.
Bankruptcy 313. Banks 314. Civil rights 315. Contracts 316. Copyrights,
patents and trademarks 317. Customs duties 318. Equity 319. Government
insurance 320. Judgments 321. Labor matters 322. Loans 323. Public lands
324. United States as party 325. Veterans' benefits
I.
IN GENERAL
1. Generally
Predecessor of 28 USCS § 1652 was restricted in its application to civil cases at
common law. United States v Reid (1851) 53 US 361, 12 How 361, 13 L Ed 1023
(ovrld in part by Rosen v United States (1918) 245 US 467, 62 L Ed 406, 38 S Ct
148).
Except in matters governed by Constitution or by federal statutes, state law is
applicable law; neither Congress nor federal courts have power to declare
substantive rules of common law applicable in state; there is no federal general
common law. Erie R.R. v Tompkins (1938) 304 US 64, 82 L Ed 1188, 58 S Ct
817, 11 Ohio Ops 246, 114 ALR 1487 (superseded by statute as stated in Chapman
9
& Cole v Itel Container Int'l B.V. (1989, CA5 Tex) 865 F2d 676, 13 FR Serv 3d
124) and (superseded by statute as stated in Wray v Gregory (1995, CA9 Nev) 61
F3d 1414, 95 CDOS 6117, 95 Daily Journal DAR 10464).
Pre-Erie federal common law is at best "a convenient source of reference for
fashioning federal rules" of post-Erie law. Clearfield Trust Co. v United
States (1943) 318 US 363, 87 L Ed 838, 63 S Ct 573 (superseded by statute
as stated in Pennsylvania, Dep't of Public Welfare v United States (1986, CA3 Pa)
781 F2d 334).
Erie threw out Swift-era general federal common law in area set apart for state
rather than federal control. United States v Standard Oil Co. (1947) 332 US 301,
91 L Ed 2067, 67 S Ct 1604 (superseded by statute as stated in United States v
Merrigan (1968, CA3 NJ) 389 F2d 21, 7 ALR Fed 279) and (superseded by statute
as stated in United States v Thomas Jefferson Corp. (1970, WD Va) 309 F Supp
1246) and (superseded by statute as stated in McCullough v Seamans (1972, ED Cal)
348 F Supp 511) and (superseded by statute as stated in United States v Trammel
(1990, CA6 Ky) 899 F2d 1483) and (superseded by statute as stated in Piquette v
Stevens (1999) 128 Md App 590, 739 A2d 905) and (superseded by statute as stated
in United States v Philip Morris Inc. (2000, DC Dist Col) 116 F Supp 2d 131, 2000
Daily Journal DAR 10757, RICO Bus Disp Guide (CCH) P 9946).
Erie requires federal courts to apply state decisional law in defining statecreated rights, obligations, and duties. Commissioner v Stern (1958) 357 US 39,
2 L Ed 2d 1126, 78 S Ct 1047, 58-2 USTC P 9594, 1 AFTR 2d 1899.
Federal common law will be fashioned where there is overriding federal
interest. Banco Nacional de Cuba v Sabbatino (1964) 376 US 398, 11 L Ed 2d
804, 84 S Ct 923 (superseded by statute as stated in Industrial Inv. Dev. Corp. v
Mitsui & Co. (1979, CA5 Tex) 594 F2d 48, 1979-1 CCH Trade Cases P 62586) and
(superseded by statute as stated in Banco Nacional de Cuba v Chase Manhattan
Bank (1981, CA2 NY) 658 F2d 875, 32 FR Serv 2d 79) and (superseded by statute
as stated in Perez v Chase Manhattan Bank, N. A. (1983, 1st Dept) 93 App Div 2d
402, 463 NYS2d 764) and (criticized in Interpamil GmbH v Collectibles, Inc. (1999,
SD NY) 1999 US Dist LEXIS 17681); Illinois v Milwaukee (1972) 406 US 91, 31 L
Ed 2d 712, 92 S Ct 1385, 4 Envt Rep Cas 1001, 2 ELR 20201 (superseded by statute
as stated in Philadelphia v Stepan Chemical Co. (1982, ED Pa) 544 F Supp 1135, 17
Envt Rep Cas 1977, 12 ELR 20915) and (superseded by statute as stated in Oneida
Indian Nation v County of Oneida (1983, CA2 NY) 719 F2d 525) and (superseded
by statute as stated in Conner v Aerovox, Inc. (1984, CA1 Mass) 730 F2d 835, 20
Envt Rep Cas 1877, 1984 AMC 2507, 14 ELR 20370) and (superseded by statute as
stated in State v Champion Int'l Corp. (1986, Tenn) 709 SW2d 569, 24 Envt Rep Cas
1371, 16 ELR 20729) and (superseded by statute as stated in USW v United Eng'g
(1995, CA6 Ohio) 52 F3d 1386, 19 EBC 1313, 149 BNA LRRM 2129, 130 CCH LC
P 11325, 1995 FED App 135P).
10
Federal decisional law rather than state law applies with respect to competence and
function of President and courts in foreign affairs. Banco Nacional de Cuba v
Sabbatino (1964) 376 US 398, 11 L Ed 2d 804, 84 S Ct 923 (superseded by statute
as stated in Industrial Inv. Dev. Corp. v Mitsui & Co. (1979, CA5 Tex) 594 F2d 48,
1979-1 CCH Trade Cases P 62586) and (superseded by statute as stated in Banco
Nacional de Cuba v Chase Manhattan Bank (1981, CA2 NY) 658 F2d 875, 32
FR Serv 2d 79) and (superseded by statute as stated in Perez v Chase Manhattan
Bank, N. A. (1983, 1st Dept) 93 App Div 2d 402, 463 NYS2d 764) and (criticized in
Interpamil GmbH v Collectibles, Inc. (1999, SD NY) 1999 US Dist LEXIS 17681).
Erie and cases following it have resulted in identical body of law, federal where
applicable and state where applicable, governing in both federal and state
courts. Van Dusen v Barrack (1964) 376 US 612, 11 L Ed 2d 945, 84 S Ct 805
(superseded by statute as stated in Ross v Colorado Outward Bound School,
Inc. (1987, CA10 Colo) 822 F2d 1524).
Neither Congress nor federal courts can fashion rules unsupported by constitutional
authority, and "in such areas state law must govern because there can be no other
law." Hanna v Plumer (1965) 380 US 460, 14 L Ed 2d 8, 85 S Ct 1136, 9 FR Serv
2d 1 (criticized in International Ship Repair & Marine Servs. v St. Paul Fire &
Marine Ins. Co. (1996, MD Fla) 944 F Supp 886, 10 FLW D 350, 1997 AMC
1419).
State interests will be overridden by creation of federal common law only where
federal government's clear and substantial interests cannot be served consistently
with respect for state interests and will suffer major damage if state law is applied.
United States v Yazell (1966) 382 US 341, 15 L Ed 2d 404, 86 S Ct 500 (criticized
in United States, SBA v Sotomayor-Santos (1996, CA1 Puerto Rico) 96 F3d 584, 30
UCCRS2d 995).
In deciding whether rules of federal common law should be fashioned, normally
guiding principle is that significant conflict between federal policy or interest and
use of state law in premises must first be specifically shown. Wallis v Pan American
Petroleum Corp. (1966) 384 US 63, 16 L Ed 2d 369, 86 S Ct 1301, 25 OGR 208.
Interstitial federal lawmaking is basic responsibility of federal courts; federal courts
have power to declare, as matter of common law or "judicial legislation," rules
which may be necessary to fill in interstitially or otherwise effectuate statutory
patterns enacted in large by Congress, and to declare governing law in area
comprising issues substantially related to established program of government
operation; that no specific federal legislation governs particular transaction to which
United States is party does not limit reach of federal law. United States v Little Lake
Misere Land Co. (1973) 412 US 580, 37 L Ed 2d 187, 93 S Ct 2389, 46 OGR 41.
Except in matters governed by the federal Constitution or by acts of Congress, law to
be applied in federal courts was the law of the state. Siris v Madden (1938, CA3 NJ)
11
95 F2d 625; Futrell v Branson (1939, CA8 Ark) 104 F2d 409; Home Indem. Co. v
O'Brien (1939, CA6 Mich) 104 F2d 413; Preferred Acc. Ins. Co. v Barker (1939,
CA6 Tenn) 104 F2d 424; Commercial Inv. Trust Co. v Minon (1939, CA3 Pa) 104
F2d 765; Francis v Humphrey (1938, DC Ill) 25 F Supp 1.
Test to determine whether federal courts should apply state rule when enforcing
rights created by state law are: (1) if state provision is substantive right or obligation
being asserted, federal court must apply it; (2) if state provision is procedural rule
which is intimately bound up with substantive right or obligation being asserted,
federal court must apply it; (3) if state provision is procedural rule which is not
intimately bound up with substantive right or obligation being asserted, but its
application might substantially change outcome of litigation, federal court should
determine whether state interests in favor of applying state rule outweigh
countervailing federal considerations against application of rule, and if state interests
predominate, state rule should be adopted. Miller v Davis (1974, CA6 Ky) 507 F2d
308, 88 BNA LRRM 2451.
2. Construction
That Congress had not amended predecessor of 28 USCS § 1652 since its
enactment in 1789 indicated clearly that construction of section by Supreme
Court was true construction and was acceptable to Congress. Baltimore & O.
R. Co. v Baugh (1893) 149 US 368, 37 L Ed 772, 13 S Ct 914.
Predecessor of 28 USCS § 1652 was merely declaratory of rule which would exist in
absence of such statute, and rule was not to be narrowed because of affirmative
legislative recognition less broad than rule. Mason v United States (1923) 260 US
545, 67 L Ed 396, 43 S Ct 200.
Because district court exercised supplemental jurisdiction over petition for writ of
certiorari, pursuant to 28 USCS § 1367, state law applied to any issue not governed
by Constitution or treaties of United States or Acts of Congress. Flava Works, Inc. v
City of Miami (2010, CA11 Fla) 609 F3d 1233, 22 FLW Fed C 1017.
3. Diversity actions
Federal courts were free in diversity cases to ascertain law independently of
state judicial decisions, which were not law but were merely someone's opinion
as to content of transcendental body of law outside of any particular state but
obligatory within it unless and until changed by statute. Guaranty Trust Co. v
York (1945) 326 US 99, 89 L Ed 2079, 65 S Ct 1464, 160 ALR 1231, reh den (1945)
326 US 806, 90 L Ed 491, 66 S Ct 7 and (ovrld as stated in Walters v Inexco Oil Co.
(1983, Miss) 440 So 2d 268) and (criticized in Hum v Dericks (1995, DC Hawaii)
162 FRD 628) and (ovrld as stated in Sanders v Mayor's Jewelers (1996, SD Fla)
942 F Supp 571, 76 BNA FEP Cas 355, 70 CCH EPD P 44654, 10 FLW Fed D 248).
12
Federal common law applies as to alignment of parties for diversity purposes. Smith
v Sperling (1957) 354 US 91, 1 L Ed 2d 1205, 77 S Ct 1112, 68 ALR2d 805.
Where case was in federal court on account of diversity of citizenship, and no federal
question was involved, court applied state law. Lubriko Co. v Wyman (1923, CA3
Pa) 290 F 12.
Federal court followed same substantive rules in diversity of citizenship cases that
state court would have applied in particular case, in order that accident of diversity
of citizenship could not operate to disturb equal administration of justice in
coordinate state and federal courts sitting side by side. Petersen v Chicago, G. W. R.
Co. (1943, CA8 Neb) 138 F2d 304, 149 ALR 755.
In diversity of citizenship cases, law of forum controls substantive rights of parties in
federal courts. Alcaro v Jean Jordeau, Inc. (1943, CA3 NJ) 138 F2d 767.
Under 28 USCS § 1652, federal court must apply state law in deciding merits of
diversity case. Miller v Davis (1974, CA6 Ky) 507 F2d 308, 88 BNA LRRM
2451.
In diversity cases where state procedural rule is derived from judicial system
fundamentally inconsistent with federal judicial system, 28 USCS § 1652 does not
require state rule to be slavishly adhered to by Federal District Court. Roberts v
Sears, Roebuck & Co. (1978, CA7 Ill) 573 F2d 976, 197 USPQ 516, cert den (1978)
439 US 860, 58 L Ed 2d 168, 99 S Ct 179, 199 USPQ 640.
Under 28 USCS § 1652 federal courts in diversity case are governed by law of
forum state. Reynolds v American-Amicable Life Ins. Co. (1979, CA5 Tex) 591
F2d 343 (criticized in Prudential Ins. Co. of Am. v Athmer (1999, CA7 Ill) 178
F3d 473).
In cases where federal courts obtained jurisdiction by reason of citizenship of
parties, predecessor of 28 USCS § 1652 applied; but it had no application to cases in
which jurisdiction of court arose out of cause of action and, consequently, involved
rights over which state legislature could exercise no authority. Schreiber v Sharpless
(1883, DC Pa) 17 F 589.
Federal court sitting in diversity is required to apply conflict of laws rules of forum
jurisdiction. Korzetz v Amsted Industries, Inc. (1979, ED Mich) 472 F Supp 136
(criticized in Johnson v Ventra Group (1998, ED Mich) 1998 US Dist LEXIS 6102)
and (criticized in Johnson v Ventra Group, Inc. (1999, CA6 Mich) 191 F3d 732,
1999 FED App 324P).
Federal District Court sitting in diversity will apply federal law when
considering effects of its own previous judgment, but state law will be adopted
13
where substance rather than procedure is at stake. Spiker v Capitol Milk
Producers Cooperative, Inc. (1983, WD Va) 577 F Supp 416.
Because court lacked diversity jurisdiction over underlying coverage dispute brought
by insurer, court was also without jurisdictional authority under 28 USCS § 1652 to
award attorneys' fees to insured under Tex. Civ. Prac. & Rem. Code Ann. § 38.001
or Fla. Stat. § 627.428; further, even if court had authority to award fees, insured
would not be entitled to fees under either state statute because it was not prevailing
party under Fed. R. Civ. P. 54. Southern-Owners Ins. Co. v Tomac of Fla., Inc.
(2010, SD Tex) 687 F Supp 2d 665.
4. Actions arising under federal statutes
Predecessor of 28 USCS § 1652 was not applicable where Congress had legislated
on the subject. Potter v National Bank (1880) 102 US 163, 12 Otto 163, 26 L Ed
111; Ex parte Fisk (1885) 113 US 713, 28 L Ed 1117, 5 S Ct 724.
If there is federal statute dealing with general subject, such statute is starting point
for fashioning post-Erie federal common law. Wallis v Pan American Petroleum
Corp. (1966) 384 US 63, 16 L Ed 2d 369, 86 S Ct 1301, 25 OGR 208; Brotherhood
of R. Trainmen v Jacksonville Terminal Co. (1969) 394 US 369, 22 L Ed 2d 344, 89
S Ct 1109, 70 BNA LRRM 2961, 59 CCH LC P 13362, reh den (1969) 394 US
1024, 23 L Ed 2d 51, 89 S Ct 1622.
Principles of Erie R. Co. v Tompkins which govern in diversity cases, including rule
that when application of federal statute is involved, decision of state trial court as to
underlying issue of state law is not controlling, apply in actions arising under federal
statute in which underlying substantive rule involved is based on state law; if there is
no decision by highest court of state, then federal authority must apply what it finds
to be state law after giving proper regard to relevant rulings of other courts of state.
Commissioner v Estate of Bosch (1967) 387 US 456, 18 L Ed 2d 886, 87 S Ct 1776,
19 AFTR 2d 1891.
Rules of Decision Act, 28 USCS § 1652, did not preclude right of federal courts to
formulate rule of decision governing right of United States in minerals secured by it
under land acquisition agreement explicitly authorized, though not precisely
governed, by Migratory Bird Conservation Act (16 USCS §§ 715-715r). United
States v Little Lake Misere Land Co. (1973) 412 US 580, 37 L Ed 2d 187, 93 S Ct
2389, 46 OGR 41.
While case involving action based on District of Columbia law would apply District
of Columbia rules of decision under 28 USCS § 1652, where penology expert's
testimony was directed toward plaintiff inmate's 42 USCS § 1983 claim and where
there was no claim based on District of Columbia law, federal evidentiary standards,
rather than District of Columbia rules, applied to admissibility of expert's testimony.
Caldwell v District of Columbia (2001, DC Dist Col) 201 F Supp 2d 27.
14
5. Actions arising in District of Columbia or in territories and
possessions
Court of appeals could defer to local interpretation of Puerto Rican statute. Cami v
Central Victoria, Ltd. (1925) 268 US 469, 69 L Ed 1056, 45 S Ct 570.
In considering constitutionality of Philippine statute, court was not bound to accept
construction by local courts. Yu Cong Eng v Trinidad (1926) 271 US 500, 70 L Ed
1059, 46 S Ct 619.
Construction of Mansfield's Digest of Arkansas, adopted as law governing
Indian territory, was federal question, as to which federal court exercised
independent judgment. Grayson v Harris (1928) 278 US 555, 73 L Ed 503, 49 S
Ct 7.
Now that 48 USCS § 1613 mandates that relations between courts established
by laws of United States and courts established by local law should mirror
relations between state and federal courts, Third Circuit concludes that §
1613 makes Erie doctrine and Rules of Decision Act, applicable to
District Court of Virgin Islands; Third Circuit sees no reason not to incorporate
federalism principles applicable throughout Third Circuit into its relationship with
Virgin Islands courts. Edwards v Hovensa, LLC (2007, CA3) 497 F3d 355, 26 BNA
IER Cas 641, 154 CCH LC P 60468.
Federal courts located in District of Columbia will apply choice-of-law and
substantive decisional rules of District of Columbia courts when appropriate
although, because of District's unique position, Rules of Decision Act (28 USCS §
1652) does not bind federal courts to that result; District's law is applied out of
deference to authority of District of Columbia Court of Appeals as highest court of
District and in order not to subvert aims of Erie doctrine. Tuxedo Contractors, Inc. v
Swindell-Dressler Co. (1979, App DC) 198 US App DC 426, 613 F2d 1159.
6. Actions arising outside of state in which federal court is sitting
If cause of action arose in one state and suit was brought in federal court in another
state, it was general rule that substantive laws of former state and procedural laws of
latter state applied. Union P. R. Co. v Wyler (1895) 158 US 285, 39 L Ed 983, 15 S
Ct 877.
If cause of action ex-contractu arose in state other than state in which suit was
pending in federal court, substantive law of state where cause of action arose would
control; thus, where note was executed and delivered in Florida and suit was brought
by assignee against maker in federal court in Pennsylvania, law of Florida controlled
15
question of negotiability of note. Burns Mortg. Co. v Fried (1934) 292 US 487, 78 L
Ed 1380, 54 S Ct 813, 92 ALR 1193.
In diversity suit brought in New York to recover for injuries sustained by pedestrian
on railroad right of way in Pennsylvania when struck by object projecting from
passing freight train, lower federal courts erred in applying "general law" and in
refusing to apply Pennsylvania common-law rule precluding recovery to
undiscovered trespassers for ordinary negligence. Erie R.R. v Tompkins (1938) 304
US 64, 82 L Ed 1188, 58 S Ct 817, 11 Ohio Ops 246, 114 ALR 1487 (superseded by
statute as stated in Chapman & Cole v Itel Container Int'l B.V. (1989, CA5 Tex) 865
F2d 676, 13 FR Serv 3d 124) and (superseded by statute as stated in Wray v Gregory
(1995, CA9 Nev) 61 F3d 1414, 95 CDOS 6117, 95 Daily Journal DAR 10464).
In action for tort, substantive law of state where tort was committed controlled
if it had been proved; cases from courts of another state bearing on like law
may be persuasive; but they are not authoritative. Delaware & Hudson Co. v
Nahas (1926, CA3 Pa) 14 F2d 56.
Cause of action arising in one state would not be enforced in federal court of another
state, where maintenance of suit on cause of action was offensive to public policy of
latter. Dougherty v Gutenstein (1935, DC NY) 10 F Supp 782.
Public policy of state in which federal court was sitting could prevent
maintenance of suit on right of action good under law of state where cause of
action arose. Dougherty v Gutenstein (1935, DC NY) 10 F Supp 782.
In diversity action brought in United States District Court in Pennsylvania to recover
for damages sustained when automobile in which plaintiffs, who were returning to
Philadelphia, was struck in rear by defendant's vehicle in Maryland, court would
apply substantive law of Maryland pursuant to 28 USCS § 1652, since accident
occurred in that state. Cavallaro v Williams (1975, ED Pa) 392 F Supp 102.
II."LAWS OF THE SEVERAL STATES" CONSTRUED
A.In General
7. Generally
Jurisdiction of state courts as fixed by state law was binding in federal courts.
Williamson v Berry (1850) 49 US 495, 8 How 495, 12 L Ed 1170.
In matters of general jurisprudence, federal courts applied unwritten or
common law of state as declared by highest court of particular state. Erie R.R.
v Tompkins (1938) 304 US 64, 82 L Ed 1188, 58 S Ct 817, 11 Ohio Ops 246, 114
ALR 1487 (superseded by statute as stated in Chapman & Cole v Itel Container
Int'l B.V. (1989, CA5 Tex) 865 F2d 676, 13 FR Serv 3d 124) and (superseded by
statute as stated in Wray v Gregory (1995, CA9 Nev) 61 F3d 1414, 95 CDOS 6117,
95 Daily Journal DAR 10464).
16
Coverage of state statute was matter solely for determination of the state. Sage
Stores Co. v Kansas (1944) 323 US 32, 89 L Ed 25, 65 S Ct 9.
United States Supreme Court would not undertake to decide questions of local law
without aid of some expression of views of judges of local courts who were familiar
with intricacies and trends of local law and practice. Busby v Electric Utilities
Employees Union (1944) 323 US 72, 89 L Ed 78, 65 S Ct 142, 15 BNA LRRM 666.
Judicial decisions are "laws of several states" within Rules of Decision Act (28
USCS § 1652), providing that in absence of federal requirements such as
Constitution or Acts of Congress, laws of several states shall be regarded as rules of
decision in civil actions in courts of United States, in cases where they apply.
Commissioner v Estate of Bosch (1967) 387 US 456, 18 L Ed 2d 886, 87 S Ct 1776,
19 AFTR 2d 1891.
When no federal question was involved and when law, common or statutory, under
consideration, was not general, and had become established as part of law of state,
federal court followed decisions of state court of last resort. Howell v WitmanSchwartz Corp. (1925, CA3 Pa) 7 F2d 513.
Where rule of general law was uncertain, state law should be followed. New
York Life Ins. Co. v Doerksen (1935, CA10 Kan) 75 F2d 96.
Court was not aware of any "general law" relating to liability in
accident cases. Boston & M. R. R. v Breslin (1935, CA1 NH) 80 F2d
749, 103 ALR 695, cert den (1936) 297 US 715, 80 L Ed 1000, 56 S
Ct 590.
In diversity of citizenship cases, it was duty of United States courts to ascertain,
construe, and apply static state law, and not to limit, modify, or repeal state doctrine.
Rehm v Interstate Motor Freight System (1943, CA6 Mich) 133 F2d 154.
Federal courts did not interfere with internal affairs of state when sought to be
regulated under state constitutions and statutes, unless necessity for such interference
was unquestioned. McCormick & Co. v Brown (1931, DC W Va) 58 F2d 994.
On question of general law federal district court followed state court's rulings in
absence of controlling federal decisions unless state court's ruling was clearly wrong.
Lawrence v Travelers' Ins. Co. (1934, DC Pa) 6 F Supp 428.
In absence of any valid attack, state statutes were presumed, in federal court, to be
valid. Mutual Life Ins. Co. v Latimer (1938, DC Cal) 23 F Supp 259.
States, by statute, could impose limitation upon remedy for right created by
Congress in field in which it was paramount and exclusive; but, there was realm in
which federal courts were free to exercise their own discretion, unrestrained by
17
application of any state law. Momand v Twentieth-Century Fox Film Corp. (1941,
DC Okla) 37 F Supp 649.
Rule that federal tribunals followed state statutes was applicable to substantive law.
Blunda v Craig (1947, DC Mo) 74 F Supp 9.
8. Commercial law
In application of laws of state as rules of decision in federal courts, there was no
difference between statute prescribing rules of commercial law and one
concerned with some other subject of narrower scope. Burns Mortg. Co. v
Fried (1934) 292 US 487, 78 L Ed 1380, 54 S Ct 813, 92 ALR 1193.
Legal questions involved in controversies over commercial papers were resolved by
application of federal rather than local law, and, in absence of applicable act of
Congress, federal courts fashioned governing rules. National Metropolitan Bank v
United States (1945) 323 US 454, 89 L Ed 383, 65 S Ct 354.
Federal court followed state decisions on question of commercial law where failure
to do so would have resulted in requiring debtor to pay same debt twice. Sonstiby v
Keeley (1882, CCD Minn) 11 F 578.
9. Common law
Declaratory act is no less expression of legislative will because rule it prescribes
is same as that announced in prior decisions of courts of state. Burns Mortg.
Co. v Fried (1934) 292 US 487, 78 L Ed 1380, 54 S Ct 813, 92 ALR 1193.
In application of laws of state as rules of decision in federal courts, there was no
valid distinction between act which altered common law and one which codified or
declared it; both were within letter of predecessor of 28 USCS § 1652. Marine Nat'l
Exchange Bank v Kalt-Zimmers Mfg. Co. (1934) 293 US 357, 79 L Ed 427, 55 S Ct
226.
In matters of general jurisprudence, federal courts applied unwritten or common law
of state as declared by highest court of particular state. Erie R.R. v Tompkins (1938)
304 US 64, 82 L Ed 1188, 58 S Ct 817, 11 Ohio Ops 246, 114 ALR 1487
(superseded by statute as stated in Chapman & Cole v Itel Container Int'l B.V.
(1989, CA5 Tex) 865 F2d 676, 13 FR Serv 3d 124) and (superseded by statute as
stated in Wray v Gregory (1995, CA9 Nev) 61 F3d 1414, 95 CDOS 6117, 95 Daily
Journal DAR 10464).
Absence of federal law in area where there is well-developed body of state law is
factor against fashioning of federal common-law rules. Madruga v Superior Court of
California (1954) 346 US 556, 98 L Ed 290, 74 S Ct 298; Wilburn Boat Co. v
18
Fireman's Fund Ins. Co. (1955) 348 US 310, 99 L Ed 337, 75 S Ct 368, reh den
(1955) 349 US 907, 99 L Ed 1243, 75 S Ct 575.
Federal courts would determine common law for themselves where there was no
state statute on subject, and state court had not laid down a settled rule on subject.
Cole v Pennsylvania R. Co. (1930, CA2 NY) 43 F2d 953, 71 ALR 1096.
Decisions of highest court of state construing common law were accepted by
federal court. Oregon v Ingram (1933, CA9 Or) 63 F2d 417, cert den (1933) 290
US 630, 78 L Ed 548, 54 S Ct 49.
Term "laws" included local rules of decision, but, strictly speaking, statute
applied only to trials at common law. National Fruit Product Co. v DwinellWright Co. (1942, DC Mass) 47 F Supp 499, 55 USPQ 199, affd (1944, CA1
Mass) 140 F2d 618, 60 USPQ 304.
Since there is no federal statute of limitations relating to commonlaw actions for personal injuries, 28 USCS § 1652 requires
application of state laws. Wade v Lynn (1960, ND Ohio) 181 F Supp
361, 13 Ohio Ops 2d 27, 84 Ohio L Abs 486.
Rules of law established by state courts of local character involving domestic
customs or usages were followed in federal courts. Converse v Mears (1908, CCD
Wis) 162 F 767.
10. Executive or administrative decisions or practices
Construction of state taxing statute given it by state administrative agency was given
respectful consideration by United States Supreme Court, but court had power to
disregard such construction where statute had not been construed by state's highest
court. Fox v Standard Oil Co. (1935) 294 US 87, 79 L Ed 780, 55 S Ct 333, reh den
(1935) 294 US 732, 79 L Ed 1261, 55 S Ct 511.
Construction of statute by department of government charged with its execution was
entitled to respectful consideration and was not overruled without cogent reasons.
Tulsa v Southwestern Bell Tel. Co. (1935, CA10 Okla) 75 F2d 343, cert den (1935)
295 US 744, 79 L Ed 1690, 55 S Ct 656.
Long-standing interpretation of statute by state commission, not questioned in
state courts or by legislature, would not be altered by court of appeals unless
shown to be clearly wrong. Duke Power Co. v South Carolina Tax Com. (1936,
CA4 SC) 81 F2d 513, cert den (1936) 298 US 669, 80 L Ed 1392, 56 S Ct 834.
19
Opinion of state attorney general construing state statute did not bind federal court,
but was entitled to great respect. Badger v Hoidale (1937, CA8 Minn) 88 F2d 208,
109 ALR 798.
Construction placed upon state statute by administrative officers in charge of its
enforcement, although not controlling, could be resorted to as aid in ascertaining
legislative intent. Liberty Nat'l Life Ins. Co. v Read (1938, DC Okla) 24 F Supp 103.
11. Legislative matters
Predecessor of 28 USCS § 1652 did not extend to private acts passed by state
legislatures relating to particular persons. Williamson v Berry (1850) 49 US
495, 8 How 495, 12 L Ed 1170.
Construction of statute by legislature, as indicated by subsequent enactment, was
entitled to consideration by federal court in interpreting such statute. Board of
Comm'rs v Bernardin (1934, CA10 Wyo) 74 F2d 809, cert den (1935) 295 US 731,
79 L Ed 1680, 55 S Ct 645.
12. Public policy
It is undoubtedly question of local policy with each state what shall be extent and
character of powers which its various political and municipal organization shall
possess, and settled decisions of its highest courts on this subject will be regarded as
authoritative by courts of United States, for it is question that relates to internal
constitution of body politic of state. Claiborne County v Brooks (1884) 111 US 400,
28 L Ed 470, 4 S Ct 489.
With policy of state legislation, federal courts have nothing to do. Missouri, Kansas
& Texas Trust Co. v Krumseig (1899) 172 US 351, 43 L Ed 474, 19 S Ct 179.
For purposes of rule that right or obligation arising under foreign law will not be
enforced where it is against public policy of forum, federal court in diversity of
citizenship cases is bound, under doctrine of Erie R. Co. v Tompkins, and subject to
its limitations, to follow public policy of state in which it is sitting. Griffin v
McCoach (1941) 313 US 498, 85 L Ed 1481, 61 S Ct 1023, 134 ALR 1462; Angel v
Bullington (1947) 330 US 183, 91 L Ed 832, 67 S Ct 657.
Supreme Court will not hesitate to abrogate state law when satisfied that its
enforcement will stand as obstacle to accomplishment and execution of
congressional purposes and objectives. Farmers Educational & Cooperative Union v
WDAY, Inc. (1959) 360 US 525, 3 L Ed 2d 1407, 79 S Ct 1302.
Typically, federal common law is developed with respect to programs and
actions which by their nature are and must be uniform throughout nation.
United States v Yazell (1966) 382 US 341, 15 L Ed 2d 404, 86 S Ct 500 (criticized
20
in United States, SBA v Sotomayor-Santos (1996, CA1 Puerto Rico) 96 F3d 584, 30
UCCRS2d 995).
Even assuming in general terms appropriateness of "borrowing" state law, specific
aberrant or hostile state rules do not provide appropriate standards for federal law.
United States v Little Lake Misere Land Co. (1973) 412 US 580, 37 L Ed 2d 187, 93
S Ct 2389, 46 OGR 41.
Federal courts sitting in New York honor public policy of New York in cases where
federal jurisdiction was founded on diversity of citizenship. Indemnity Ins. Co. v Pan
American Airways (1944, DC NY) 57 F Supp 980.
B.State Courts Decisions as Determining Law of State
13. Generally
Under Erie, state judicial decisions are "laws of the several States"
within meaning of Rules of Decision Act, and therefore are applicable law in
diversity cases. Erie R.R. v Tompkins (1938) 304 US 64, 82 L Ed 1188, 58 S Ct 817,
11 Ohio Ops 246, 114 ALR 1487 (superseded by statute as stated in Chapman &
Cole v Itel Container Int'l B.V. (1989, CA5 Tex) 865 F2d 676, 13 FR Serv 3d 124)
and (superseded by statute as stated in Wray v Gregory (1995, CA9 Nev) 61 F3d
1414, 95 CDOS 6117, 95 Daily Journal DAR 10464); West v American Tel. & Tel.
Co. (1940) 311 US 223, 85 L Ed 139, 61 S Ct 179, 19 Ohio Ops 77, 132 ALR 956;
King v Order of United Commercial Travelers (1948) 333 US 153, 92 L Ed 608, 68
S Ct 488, reh den (1948) 333 US 878, 92 L Ed 1153, 68 S Ct 900; Cohen v
Beneficial Industrial Loan Corp. (1949) 337 US 541, 93 L Ed 1528, 69 S Ct 1221
(criticized in R.H.D. v S.F. (In re Baby K.) (1998, Utah App) 967 P2d 947, 354 Utah
Adv Rep 37); Commissioner v Estate of Bosch (1967) 387 US 456, 18 L Ed 2d 886,
87 S Ct 1776, 19 AFTR 2d 1891.
Federal nisi prius and appellate tribunals alike would conform their orders to
state law as of time of entry so that intervening and conflicting state decisions
would cause reversal of judgments which were correct when entered, for under
rules of decision statute, until such time as case was no longer sub judice duty
rested upon federal courts to apply state law in accordance with then
controlling decision of highest state court. Vandenbark v Owens-Illinois Glass
Co. (1941) 311 US 538, 85 L Ed 327, 61 S Ct 347.
Questions which had become settled in local practice by state court decisions
controlled in federal court, though no state statute was involved. O'Neil v Dreier
(1932, CA9 Hawaii) 61 F2d 598.
Federal court was bound to presume that affirmance by a state court embodied
deliberate judgment of the court. First Trust Co. v County Board of Education (1935,
CA6 Ky) 78 F2d 114.
21
In ascertaining applicable law of state, federal court could consider court decisions
and other available sources of local law and could apply court decision in light of
well-established stare decisis rule and its limitations; it was not however required to
speculate as to how state court might have decided question before it if it had not
already decided it; and it was not required to surrender its own judgment as to what
local law was on account of dicta or other chance expression of the judges of local
courts. New England Mut. Life Ins. Co. v Mitchell (1941, CA4 Va) 118 F2d 414,
cert den (1941) 314 US 629, 86 L Ed 505, 62 S Ct 60.
Federal courts were not permitted to form independent judgment upon
questions involving local law and were compelled in diversity citizenship cases,
when deciding conflict of laws, to follow the rules prevailing in state where the
federal court sat. Transit Bus Sales v Kalamazoo Coaches, Inc. (1944, CA6
Mich) 145 F2d 804.
Under doctrine of Erie R. Co. v Tompkins, it was not function of federal courts to
examine correctness of decisions of courts of state whose law was to be applied in
federal court. Klages v Cohen (1945, CA2 NY) 146 F2d 641.
Federal court need not regard as strictly binding state decision in which rule now
urged may have failed for want of advocate. Rivota v Fidelity & Guaranty Life Ins.
Co. (1974, CA7 Ill) 497 F2d 1225.
Where state court decision was not res judicata because orders in issue were not
same, opinion as to law was given particular weight where parties were same.
Wichita Gas Co. v Public Service Com. (1930, DC Kan) 3 F Supp 722.
Federal courts followed interpretation of state statutes made by supreme court of
state where no question of general or commercial law, or violation of Constitution or
laws of United States was involved. Spruill v Reserve Loan Life Ins. Co. (1938, DC
Okla) 21 F Supp 889.
Whether law of state was declared by legislature in statute or by highest state court
in decision was not matter of federal concern. Lincoln Mines Operating Co. v Huron
Holding Corp. (1939, DC Idaho) 27 F Supp 720, revd on other grounds (1940, CA9
Idaho) 111 F2d 438, revd on other grounds (1941) 312 US 183, 85 L Ed 725, 61 S
Ct 513, reh den (1941) 313 US 598, 85 L Ed 1550, 61 S Ct 840.
Federal district court was bound by interpretation of statute of state by its own
courts. United States v Feazel (1943, WD La) 49 F Supp 679, 43-1 USTC P 9499, 30
AFTR 1472, app dismd (1943, CA5 La) 32 AFTR 1645.
Under 28 USCS § 1652, laws include not only state statutes, but unwritten law of
state as pronounced by its courts. Stueve v American Honda Motors Co. (1978, DC
Kan) 448 F Supp 167.
22
When interpreting state law, federal court is bound by interpretation of law by
that state's courts. Cherry v Steiner (1982, DC Ariz) 543 F Supp 1270, 14 ELR
20657, affd (1983, CA9 Ariz) 716 F2d 687, 14 ELR 20676, cert den (1984) 466 US
931, 80 L Ed 2d 190, 104 S Ct 1719.
14. Comity
Comity required federal court to follow state decision rendered subsequent to accrual
of right presented for litigation in federal court. Medical Arts Bldg. Co. v Minnesota
Loan & Trust Co. (1935, CA8 Minn) 78 F2d 937, 101 ALR 770.
While there was not strict duty of obedience, comity decreed that deference was at
all times owing to state decision. Southern Bell Tel. & Tel. Co. v Louisiana Public
Service Com. (1937, DC La) 20 F Supp 248.
Federal district court for Oregon was not bound to follow Arizona law but was
bound to follow Oregon law, but said court was bound, as other courts sitting in
Oregon, to give full faith and credit to judgment of Arizona court. In re Ross (1942,
DC Or) 48 F Supp 815.
Federal courts were not required to follow state court decisions made on ground of
comity. Stowe v Balfast Sav. Bank (1897, CCD Me) 92 F 90, affd (1899, CA1 Me)
92 F 100.
15. Decisions after accrual of rights of parties
On question as to liability of coal mining company for injuries due to failure to
furnish sufficient support to overlying or surface land, in absence of statutory
provision on point involved, where there was no decision of state court before injury
occurred determining law on question, federal court was not required to follow
decision on such question rendered by state court after injury occurred. Kuhn v
Fairmont Coal Co. (1910) 215 US 349, 54 L Ed 228, 30 S Ct 140.
Federal court is not bound, in cases between citizens of different states, to follow
state decision, if it was rendered after date of transaction out of which rights of
parties arose. Kuhn v Fairmont Coal Co. (1910) 215 US 349, 54 L Ed 228, 30 S Ct
140.
When contracts and transactions are entered into and rights have accrued under
particular state of local decisions, or when there has been no decision by state court
on particular question involved, then federal courts properly claim right to give
effect to their own judgment as to what is law of state applicable to case, even where
different view has been expressed by state court after rights of parties accrued; but
even in such cases, for sake of comity and to avoid confusion, Federal court should
always lean to agreement with state court if question is balanced with doubt. Kuhn v
Fairmont Coal Co. (1910) 215 US 349, 54 L Ed 228, 30 S Ct 140.
23
Where, before rights of parties accrued, certain rules relating to real estate have been
so established by state decisions as to become rules of property and action in state,
those rules are accepted by federal court as authoritative declarations of law of state;
but where law of state has not been thus settled, it is not only right, but duty, of
federal court to exercise its own judgment, as it also always does when case before it
depends upon doctrines of commercial law and general jurisprudence. Kuhn v
Fairmont Coal Co. (1910) 215 US 349, 54 L Ed 228, 30 S Ct 140.
State court decision construing state statute could not be given retroactive effect in
respect of judgment of federal district court so as to render such judgment erroneous.
Concordia Ins. Co. v School Dist. (1931) 282 US 545, 75 L Ed 528, 51 S Ct 275.
Construction of statute (Uniform Negotiable Instruments Law) related back to
time of enactment, though rights of parties accrued in meantime. Marine Nat'l
Exchange Bank v Kalt-Zimmers Mfg. Co. (1934) 293 US 357, 79 L Ed 427, 55 S
Ct 226.
State decisions, extant at time of entry of judgment, controlled judgment of federal
court, notwithstanding opposite view held at time of trial. Vandenbark v OwensIllinois Glass Co. (1941) 311 US 538, 85 L Ed 327, 61 S Ct 347.
Construction of ordinances after accrual of rights thereunder was not binding on
federal courts. Denver v Denver Tramway Corp. (1927, CA8 Colo) 23 F2d 287, cert
den (1928) 278 US 616, 73 L Ed 539, 49 S Ct 20.
Decisions of state court rendered after sale of bonds which were subject of suit in
federal court were not binding on latter court. Shidler v H. C. Speer & Sons Co.
(1932, CA10 Okla) 62 F2d 544.
District court's judgment, correct under state law at time it was rendered, was
reversed on appeal where law had been changed by subsequent decisions. Groner v
United States (1934, CA8 Mo) 73 F2d 126.
Federal courts should change their rulings on pending supplemental jurisdiction
claims upon change in relevant state law, since they are required to do so in diversity
cases and other cases controlled by Rules of Decision Act, which is arguably source
of authority for applying state statute of limitations to state law claims brought under
supplemental jurisdiction., Bouton v BMW of N. Am. (1994, CA3 NJ) 29 F3d 103
(criticized in Harrison v Eddy Potash, Inc. (1997, CA10 NM) 112 F3d 1437, 73
BNA FEP Cas 1384, 156 BNA LRRM 2033, 70 CCH EPD P 44689) and (criticized
in Robinson v City of Pittsburgh (1997, CA3 Pa) 120 F3d 1286, 74 BNA FEP Cas
359, 71 CCH EPD P 44983).
Decision of state court construing statute after accrual of rights thereunder was not
controlling. Ware County v National Surety Co. (1927, DC Ga) 17 F2d 444.
24
16. Dicta
If construction put by court of state upon one of its statutes was not matter in
judgment, if it might have been decided either way without affecting any right
brought into question, then, according to principles of common law, opinion on such
question was not decision. Carroll v Lessee of Carroll (1854) 57 US 275, 16 How
275, 14 L Ed 936.
Questions which merely lurk in record, neither brought to attention of court nor ruled
upon, are not to be considered as having been so decided as to constitute precedents.
Bingham v United States (1935) 296 US 211, 80 L Ed 160, 56 S Ct 180, 36-1 USTC
P 9013, 35-2 USTC P 9662, 16 AFTR 1122; KVOS, Inc. v Associated Press (1936)
299 US 269, 81 L Ed 183, 57 S Ct 197.
General expressions, in every opinion, are to be taken in connection with case in
which those expressions are used; if they go beyond case, they may be respected, but
ought not to control judgment in subsequent suit when very point is presented for
decision. Osaka Shosen Kaisha Line v United States (1937) 300 US 98, 81 L Ed 532,
57 S Ct 356.
Expressions as to matters not at issue and wholly unnecessary to disposition of case
and merely by way of illustration were respected but did not control in subsequent
case when precise point was presented for decision. Brush v Commissioner (1937)
300 US 352, 81 L Ed 691, 57 S Ct 495, 37-1 USTC P 9175, 18 AFTR 1156, 108
ALR 1428 (ovrld in part by Graves v New York (1939) 306 US 466, 83 L Ed 927,
59 S Ct 595, 39-1 USTC P 9411, 22 AFTR 290, 120 ALR 1466) and (ovrld as stated
in Garcia v San Antonio Metro. Transit Auth. (1985) 469 US 528, 83 L Ed 2d 1016,
105 S Ct 1005, 27 BNA WH Cas 65, 36 CCH EPD P 34995, 102 CCH LC P 34633).
Dicta in a state decision did not control settled rule established by decisions of the
Supreme Court of United States. Leeper v Lemon G. Neely Co. (1923, CA6 Ky) 293
F 967, cert den (1924) 264 US 586, 68 L Ed 863, 44 S Ct 335.
Opinion of Ohio court would be looked to determine courts' construction of state
statute, though rule of court provided that syllabus be considered as pronouncement,
and though statements were considered as dictum. Republic Cresoting Co. v Boldt
Const. Co. (1930, CA6 Ohio) 38 F2d 739.
Dictum of state's highest court would not be ignored by federal court ascertaining the
meaning of a state law or its constitution. Badger v Hoidale (1937, CA8 Minn) 88
F2d 208, 109 ALR 798.
17. Friendly or test cases
Authority of state court's decision was not affected because rendered in friendly suit.
Sanford v Poe (1895, CA6 Ohio) 69 F 546, affd (1897) 165 US 194, 41 L Ed 683, 17
25
S Ct 305, reh den (1897) 166 US 185, 41 L Ed 965, 17 S Ct 604; Garland Co. v
Filmer (1932, DC Cal) 1 F Supp 8.
18. State's highest court
Wherever decisions of state courts relate to some law of local character, which may
have become established by those courts, or had always been part of law of state,
decisions on subject were usually conclusive and always entitled to highest respect
of federal courts; where such local law or custom had been established by repeated
decisions of highest courts of state, it became also law governing courts of United
States sitting in that state. Bucher v Cheshire R. Co. (1888) 125 US 555, 31 L Ed
795, 8 S Ct 974; Kuhn v Fairmont Coal Co. (1910) 215 US 349, 54 L Ed 228, 30 S
Ct 140.
That decision was rendered by divided court (with majority concurring in decision)
was no reason for not following decision, though court was almost equally divided.
Williams v Eggleston (1898) 170 US 304, 42 L Ed 1047, 18 S Ct 617.
Decision of Illinois supreme court denying certiorari to review decision of Illinois
court of appeals was not approval of decision of court of appeals. Graham v WhitePhillips Co. (1935) 296 US 27, 80 L Ed 20, 56 S Ct 21, 102 ALR 24; Tipton v
Atchison, T. & S. F. R. Co. (1936) 298 US 141, 80 L Ed 1091, 56 S Ct 715, 104
ALR 831.
Rulings of highest state court had to be taken by federal courts as controlling on
question of state law unless it could be said with some assurance that such court
would not follow them in future. Meredith v Winter Haven (1943) 320 US 228, 88 L
Ed 9, 64 S Ct 7.
Decision of state supreme court, whatever its grounds, was binding on United States
Supreme Court, insofar as state law was concerned. Williams v Kaiser (1945) 323
US 471, 89 L Ed 398, 65 S Ct 363.
Rule that federal courts would follow construction of state statute announced by
highest tribunal of state where no federal question was involved applied where
decisions of the highest court of a state construed its former decisions. American
Liability & Surety Co. v Bluefield Supply Co. (1934, CA4 W Va) 70 F2d 187.
On questions of purely local law, court of appeals was bound by the decisions of
highest state court. West Missouri Power Co. v Washington (1935, CA10 Kan)
80 F2d 420, cert den (1936) 298 US 668, 80 L Ed 1392, 56 S Ct 834.
Interpretation of state statute by highest court of state was followed by federal
courts. In re Dederick (1937, CA10 Kan) 91 F2d 646; Pacific Can Co. v Hewes
(1938, CA9 Wash) 95 F2d 42; Fairfax ex rel. Barringer v Hubler (1938, DC Okla)
23 F Supp 66; O'Neill Bros., Inc. v Crowley (1938, DC SC) 24 F Supp 705.
26
Question whether or not "osteopathic physicians" in state of Kansas were
"physicians" within meaning of Harrison Narcotic Act depended upon state
statutes as construed by state supreme court. Burke v Kansas State Osteopathic
Assn, Inc. (1940, CA10 Kan) 111 F2d 250.
While it is true that federal court sitting in diversity may diverge from existing
precedent where there is sufficient evidence that the highest state court would be
willing to entertain change in its common law, federal court should proceed with
great caution when effect of its ruling would be to broaden law beyond point where
any other court has yet ventured; thus, while much has been written about presumed
trend toward making punitive damages more easily obtainable in contract litigation,
it cannot be assumed on such scant evidence that state's highest court would adopt
such rule with its sweeping implications, particularly where case law suggest that
state's courts have been cautious in their approach to availability of punitive damages
in contract claims. W.A. Wright, Inc. v KDI Sylvan Pools, Inc. (1984, CA3 NJ) 746
F2d 215.
Although Mississippi Supreme Court declined certification from Fifth Circuit of
certain liability issues, Fifth Circuit itself must interpret rule of law as would inferior
Mississippi Court. Jackson v Johns-Manville Sales Corp. (1986, CA5 Miss) 781 F2d
394, CCH Prod Liab Rep P 10893, cert den (1986) 478 US 1022, 92 L Ed 2d 743,
106 S Ct 3339.
Federal courts followed decisions of highest state court in questions which
concerned merely the constitution and laws of such state. Union Cent. Life Ins. Co. v
Hoffman (1937, DC Neb) 18 F Supp 830.
Construction of state statute by highest court of state was binding on federal courts,
unless so unfair and unreasonable as to obstruct federal right. Commissioners of
Sinking Fund v Anderson (1937, DC Ky) 20 F Supp 217, mod (1940, CA6 Ky) 110
F2d 961, cert den (1940) 311 US 669, 85 L Ed 429, 61 S Ct 28.
In action involving construction of Oklahoma statute, federal court gave
consideration to construction placed upon similar statute by other jurisdictions but it
was controlled by construction placed upon Oklahoma statute by supreme court of
that state. Spruill v Reserve Loan Life Ins. Co. (1938, DC Okla) 21 F Supp 889.
If state's highest court has spoken on point, determination of question of state law by
any lower court of that state, as to underlying issue of state law, is not controlling.
Citizens & Southern Nat'l Bank v Auer (1978, ED Tenn) 514 F Supp 634, revd on
other grounds (1981, CA6 Tenn) 640 F2d 837.
19. Intermediate or inferior state courts
27
Decisions of Illinois court of appeals did not bind federal courts as stare decisis.
Graham v White-Phillips Co. (1935) 296 US 27, 80 L Ed 20, 56 S Ct 21, 102 ALR
24.
In order to be binding under doctrine of stare decisis, decision of state court must be
rendered or approved by state court of last resort of state. Graham v White-Phillips
Co. (1935) 296 US 27, 80 L Ed 20, 56 S Ct 21, 102 ALR 24.
Federal court is not free to disregard decisions of state's intermediate appellate courts
unless it is convinced by other persuasive data that state's highest court would decide
otherwise. Fidelity Union Trust Co. v Field (1940) 311 US 169, 85 L Ed 109, 61 S
Ct 176, reh den (1941) 311 US 730, 85 L Ed 475, 61 S Ct 438 and reh den (1941)
314 US 709, 86 L Ed 565, 62 S Ct 118 and (criticized in In re Air Crash Disaster at
Boston (1975, DC Mass) 399 F Supp 1106); Six Cos. of California v Joint Highway
Dist. (1940) 311 US 180, 85 L Ed 114, 61 S Ct 186, reh den (1941) 311 US 730, 85
L Ed 475, 61 S Ct 438; West v American Tel. & Tel. Co. (1940) 311 US 223, 85 L
Ed 139, 61 S Ct 179, 19 Ohio Ops 77, 132 ALR 956; Stoner v New York Life Ins.
Co. (1940) 311 US 464, 85 L Ed 284, 61 S Ct 336, reh den (1941) 312 US 713, 85 L
Ed 1144, 61 S Ct 609; Vandenbark v Owens-Illinois Glass Co. (1941) 311 US 538,
85 L Ed 327, 61 S Ct 347; Huron Holding Corp. v Lincoln Mine Operating Co.
(1941) 312 US 183, 85 L Ed 725, 61 S Ct 513, reh den (1941) 313 US 598, 85 L Ed
1550, 61 S Ct 840.
Decisions of state trial court, as distinguished from those of intermediate appellate
court, are not required to be followed by federal courts in determining questions of
state law. King v Order of United Commercial Travelers (1948) 333 US 153, 92 L
Ed 608, 68 S Ct 488, reh den (1948) 333 US 878, 92 L Ed 1153, 68 S Ct 900.
Decisions by state trial courts were not binding upon federal courts. Commissioner v
Estate of Bosch (1967) 387 US 456, 18 L Ed 2d 886, 87 S Ct 1776, 19 AFTR 2d
1891.
Intermediate state appellate court decisions, but not state trial court decisions, are
binding on federal courts in diversity of citizenship cases involving unfair trade
practices. Addressograph-Multigraph Corp. v American Expansion Bolt & Mfg. Co.
(1941, CA7 Ill) 124 F2d 706, 51 USPQ 495, cert den (1942) 316 US 682, 86 L Ed
1755, 62 S Ct 1270, 53 USPQ 685; Eversharp, Inc. v Pal Blade Co. (1950, CA2 NY)
182 F2d 779, 85 USPQ 471; Bryan v Kershaw (1966, CA5 Tex) 366 F2d 497, 151
USPQ 148, 10 FR Serv 2d 1306, cert den (1967) 386 US 959, 18 L Ed 2d 108, 87 S
Ct 1030, 152 USPQ 843.
Decisions by intermediate state appellate courts are binding on federal courts in
diversity of citizenship actions involving tort and personal injury issues. Continental
Casualty Co. v Ohio Edison Co. (1942, CA6 Ohio) 126 F2d 423; Seymour v Union
News Co. (1954, CA7 Ill) 217 F2d 168; Werner v Hearst Publishing Co. (1961, CA9
Cal) 297 F2d 145; St. Clair v Eastern Air Lines, Inc. (1962, CA2 NY) 302 F2d 477;
28
Pritchard v Liggett & Myers Tobacco Co. (1965, CA3 Pa) 350 F2d 479, cert den
(1966) 382 US 987, 15 L Ed 2d 475, 86 S Ct 549 and amd on other grounds (1966,
CA3 Pa) 370 F2d 95, cert den (1967) 386 US 1009, 18 L Ed 2d 436, 87 S Ct 1350.
Federal courts have declined to follow intermediate state appellate court decisions
where federal courts felt convinced by persuasive data that state's highest court
would decide otherwise. Cooper v American Airlines, Inc. (1945, CA2 NY) 149 F2d
355, 162 ALR 318; Sullivan v Shell Oil Co. (1956, CA9 Cal) 234 F2d 733, cert den
(1956) 352 US 925, 1 L Ed 2d 160, 77 S Ct 221; Strubbe v Sonnenschein (1962,
CA2 NY) 299 F2d 185, 97 ALR2d 1386; Shelp v National Surety Corp. (1964, CA5
La) 333 F2d 431, cert den (1964) 379 US 945, 13 L Ed 2d 543, 85 S Ct 439.
State trial court decisions are not binding upon federal courts in diversity of
citizenship cases involving issues pertaining to such real property matters as
mortgages and leases. Berkshire Land Co. v Federal Sec. Co. (1952, CA3 Pa) 199
F2d 438; Hove v Atchison (1956, CA8 ND) 238 F2d 819, 7 OGR 447.
State trial court decision is not controlling in diversity of citizenship case as to
liability, under state law, of incorporators for debts incurred before completion of
corporation's organization, but intermediate state appellate court decision is
controlling as to state law affecting surviving partner's rights. Doggrell v Great
Southern Box Co. (1953, CA6 Tenn) 206 F2d 671; Jones v Schellenberger (1955,
CA7 Ill) 225 F2d 784, cert den (1956) 350 US 989, 100 L Ed 855, 76 S Ct 476.
Federal courts, while declaring state trial court decisions not binding, have
nevertheless given them some weight and have reached same results as were reached
by state trial courts. Brown v Moore (1957, CA3 Pa) 247 F2d 711, 69 ALR2d 288,
cert den (1957) 355 US 882, 2 L Ed 2d 112, 78 S Ct 148; Maryland Casualty Co. v
Burley (1965, CA4 Va) 345 F2d 138; Royal Indem. Co. v Clingan (1966, CA6
Tenn) 364 F2d 154.
Decisions by state trial courts are not binding on federal courts in diversity of
citizenship actions involving tort and personal injury issues. Gerr v Emrick (1960,
CA3 Pa) 283 F2d 293, cert den (1961) 365 US 817, 5 L Ed 2d 695, 81 S Ct 698;
Brooten v Cudahy Packing Co. (1961, CA8 Minn) 291 F2d 284.
Federal courts have declined to follow intermediate state appellate court decision
where highest state court's reversal of such decision on other grounds had effect,
under state law, of depriving decision of precedential effect. Curry v Fred Olsen
Line (1966, CA9 Cal) 367 F2d 921, 31 Cal Comp Cas 515, cert den (1967) 386 US
971, 18 L Ed 2d 131, 87 S Ct 1165.
Although, pursuant to Erie doctrine, District Court of Virgin Islands can and should
look to decisions rendered by Superior Court of Virgin Islands as datum for
ascertaining state law, district court is not bound by superior court decisions because
superior court is only trial court and is not highest court of Territory of U.S. Virgins
29
Islands. Edwards v Hovensa, LLC (2007, CA3) 497 F3d 355, 26 BNA IER Cas 641,
154 CCH LC P 60468.
Although pursuant to 48 USCS § 1613, Rules of Decision Act, and Erie doctrine
applied to Virgin Islands district court, district court did not err in concluding that it
was not bound by decisions issued by Superior Court of Virgin Islands because
superior court was only territorial trial court; district court could and should consider
superior court's opinion as datum for ascertaining state law, in absence of applicable
precedent from Supreme Court of Virgin Islands. Edwards v Hovensa, LLC (2007,
CA3) 497 F3d 355, 26 BNA IER Cas 641, 154 CCH LC P 60468.
Federal District Court is not bound by interpretation of Kentucky statute by Jefferson
County Quarterly Court, since it is not authoritative expression of state law that
Federal District Court is obligated to follow under 28 USCS § 1652. Kane v
McDaniel (1975, WD Ky) 407 F Supp 1239.
Once state intermediate civil appellate court has established appropriate standard of
liability in state, federal court setting in that state cannot disregard that decision
unless it is convinced that state Supreme Court would decide otherwise. Street v
National Broadcasting Co. (1977, ED Tenn) 512 F Supp 398, affd (1981, CA6 Tenn)
645 F2d 1227, 7 Media L R 1001, cert dismd (1981) 454 US 1095, 70 L Ed 2d 636,
102 S Ct 667.
Federal District Court sitting in diversity must adhere to state's "internal" choice of
law rule that binds state trial court to decisions of appellate court in its own district
when appellate courts diverge. Abbott Laboratories v Granite State Ins. Co. (1983,
ND Ill) 573 F Supp 193 (criticized in Applied Micro v SJI Fulfillment (1996, ND Ill)
941 F Supp 750) and (criticized in Allstate Ins. Co. v Westinghouse Elec. Corp.
(1999, ND Ill) 68 F Supp 2d 983).
20. State court decisions construing federal constitution
Existence of right claimed under United States constitution could not be determined
by a state enactment or by the interpretation of a state statute by its highest court.
Pease v Commissioner (1936, CA6) 83 F2d 122, 36-1 USTC P 9236, 17 AFTR 934,
cert den (1936) 299 US 562, 81 L Ed 414, 57 S Ct 25.
Decision of Supreme Court of Wyoming holding that suit against University of
Wyoming was suit against state, within meaning of 11th Amendment of Constitution
of United States, was not binding on federal court. Fidelity & Deposit Co. v
University of Wyoming (1926, DC Wyo) 16 F2d 150.
Federal court was bound to form its own judgment of meaning of Constitution of
United States, regardless of construction by state courts. Philadelphia ex rel. Furey v
Philadelphia Rapid Transit Co. (1926, DC Pa) 27 F2d 439, app dismd (1928) 278 US
660, 73 L Ed 568, 49 S Ct 6.
30
Federal courts were vested with duty to determine for themselves what was due
process under 14th Amendment of Constitution of United States and were not bound
by rulings of state courts thereon. Dalche v Board of Comm'rs (1931, DC La) 49 F2d
374.
Decision of state court as to constitutionality under United States Constitution of city
ordinance was entitled to respect in federal court, although federal court was not
bound by such decision and was not absolved from exercising independent
judgment. Feldman v Cincinnati (1937, DC Ohio) 20 F Supp 531, 9 Ohio Ops 149.
Federal courts in applying Seventh Amendment to United States Constitution
guaranteeing trial by jury "in suits at common law" were not bound by decisions of
state courts. Hollingsworth v General Petroleum Corp. (1939, DC Or) 26 F Supp
917.
21. State court decisions construing federal statutes
Decision of state court construing federal statute was not binding on federal court as
stare decisis. United States v Eckford (1868) 73 US 484, 6 Wall 484, 18 L Ed 920;
Tipton v Atchison, T. & S. F. R. Co. (1936) 298 US 141, 80 L Ed 1091, 56 S Ct 715,
104 ALR 831.
Predecessor of 28 USCS § 1652 did not apply where state law sought to be
administered was inconsistent with act of Congress. Hanks Dental Asso. v
International Tooth Crown Co. (1904) 194 US 303, 48 L Ed 989, 24 S Ct 700.
Supreme Court is not bound by decision of state court that director general of
railroads waived his federal right. Davis v O'Hara (1924) 266 US 314, 69 L Ed 303,
45 S Ct 104.
Where federal right had been specially set up and claimed in state court, United
States Supreme Court, on appeal, was not concluded by holding of state supreme
court, even if question was one of fact, but was authorized to make independent
determination of question of denial of federal right. Pollock v Williams (1944) 322
US 4, 88 L Ed 1095, 64 S Ct 792.
State courts' constructions of prior state acts similar to Federal Probation Act were
not binding on federal courts construing federal act. United States ex rel. Demarois v
Farrell (1937, CA8 Minn) 87 F2d 957, cert den (1937) 302 US 683, 82 L Ed 527, 58
S Ct 31, reh den (1937) 302 US 775, 82 L Ed 600, 58 S Ct 135.
Interpretation of federal statute by state supreme court was not binding on federal
courts. United States v Montana (1943, CA9 Mont) 134 F2d 194, cert den (1943)
319 US 772, 87 L Ed 1720, 63 S Ct 1438.
31
State statute adopted by Congress for particular purpose did not carry state
construction with reference to different purpose. In re Pacific Tel. & Tel. Co. (1930,
DC Cal) 38 F2d 833.
C.Validity and Construction of State Law
1.Constitutional Matters
22. Construction of state constitution by state courts
Construction of state constitution by its highest court was binding on federal courts.
Luther v Borden (1849) 48 US 1, 7 How 1, 12 L Ed 581; Nesmith v Sheldon (1849)
48 US 812, 7 How 812, 12 L Ed 925; Provident Institution v Massachusetts (1868)
73 US 611, 6 Wall 611, 18 L Ed 907; United States ex rel Morgan v Gates (1869) 74
US 610, 7 Wall 610, 19 L Ed 202; Chicago v Sheldon (1870) 76 US 50, 9 Wall 50,
19 L Ed 594; Aicardi v State (1874) 86 US 635, 19 Wall 635, 22 L Ed 215.
When constitution of state had received one uniform construction, it had to be
regarded as true one. Ohio Life Ins. & Trust Co. v Debolt (1854) 57 US 416, 16
How 416, 14 L Ed 997.
Where state supreme court changed its ruling on meaning of article of state
constitution involved, the federal court was bound to follow. American Sugar Ref.
Co. v New Orleans (1902, CA5 La) 119 F 691.
Decisions of state supreme court interpreting state constitution were not binding on
federal court where such decisions were handed down after bonds which were
subject of controversy had been issued and sold. Board of Public Instruction v
Gillespie (1936, CA5 Fla) 81 F2d 586.
Federal court followed state court's construction of state constitution in determining
question of impairment of contract rights. Sambor v Philadelphia Rapid Transit Co.
(1928, DC Pa) 27 F2d 406, app dismd (1928) 278 US 572, 73 L Ed 513, 49 S Ct 93.
23. Validity of state statutes under federal constitution
When question was impairing of obligation of contract by state legislation, federal
court ascertained for itself whether there was contract to be impaired. Delmas v
Insurance Co. (1872) 81 US 661, 14 Wall 661, 20 L Ed 757.
On appeal from decision of state court of highest resort upholding validity of state
statute under federal Constitution, United States Supreme Court could declare statute
invalid under federal Constitution. W. W. Cargill Co. v Minnesota (1901) 180 US
452, 45 L Ed 619, 21 S Ct 423; Smiley v Kansas (1905) 196 US 447, 49 L Ed 546,
25 S Ct 289; Armour Packing Co. v Lacy (1906) 200 US 226, 50 L Ed 451, 26 S Ct
232; Farncomb v Denver (1920) 252 US 7, 64 L Ed 424, 40 S Ct 271; Bunch v Cole
(1923) 263 US 250, 68 L Ed 290, 44 S Ct 101; Hanover Fire Ins. Co. v Harding
(1926) 272 US 494, 71 L Ed 372, 47 S Ct 179, 49 ALR 713; Georgia R. & Electric
32
Co. v Decatur (1935) 295 US 165, 79 L Ed 1365, 55 S Ct 701; Phelps v Board of
Education (1937) 300 US 319, 81 L Ed 674, 57 S Ct 483.
Decision of state court that state statute was valid under federal Constitution was not
binding on federal court as stare decisis; and, in determining such validity, federal
court was bound by state court's construction of challenged state statute; provided,
however, that on question of impairing obligation of contracts federal court would
determine whether contract existed and would construe contract (though statute was
contract) and determine whether obligation was impaired. Lindsley v Natural
Carbonic Gas Co. (1911) 220 US 61, 55 L Ed 369, 31 S Ct 337; Midland Realty Co.
v Kansas City Power & Light Co. (1937) 300 US 109, 81 L Ed 540, 57 S Ct 345, reh
den (1937) 300 US 687, 81 L Ed 888, 57 S Ct 504; Dial v Chatman (1934, CA4 NC)
70 F2d 21; Rowekamp v Mercantile-Commerce Bank & Trust Co. (1934, CA8 Ark)
72 F2d 852; Sovereign Camp, W. O. W. v Gillespie (1937, CA8 Ark) 87 F2d 944,
cert den (1937) 301 US 698, 81 L Ed 1353, 57 S Ct 925.
When contract clause was invoked, United States Supreme Court could determine
for itself meaning and effect of contract. Violet Trapping Co. v Grace (1936) 297 US
119, 80 L Ed 518, 56 S Ct 386; Ingraham v Hanson (1936) 297 US 378, 80 L Ed
728, 56 S Ct 511.
Where state supreme court upheld its minimum wage law, and refused to regard
decision of United States Supreme Court holding another minimum wage law
invalid as determinative, and pointed to other decisions of latter court as justifying
its position, state court ruling demanded reexamination by United States Supreme
Court of its earlier decision holding minimum wage law invalid. West Coast Hotel
Co. v Parrish (1937) 300 US 379, 81 L Ed 703, 57 S Ct 578, 8 Ohio Ops 89, 1 BNA
LRRM 754, 1 CCH LC P 17021, 108 ALR 1330 (criticized in Roe v Butterworth
(1997, SD Fla) 958 F Supp 1569, 10 FLW Fed D 603).
In passing upon constitutionality of state statutes, federal courts accorded great
respect to determination of state legislature and state courts as to what constituted a
public use. Nev-Cal Electric Sec. Co. v Imperial Irr. Dist. (1936, CA9 Cal) 85 F2d
886, cert den (1937) 300 US 662, 81 L Ed 871, 57 S Ct 493.
Where state legislation was attacked in federal courts, as impairing obligation of
contract in violation of federal Constitution, federal courts determined for
themselves whether contractual rights existed and were impaired by subsequent
legislation. Tulsa v Oklahoma Natural Gas Co. (1925, DC Okla) 4 F2d 399, app
dismd (1925) 269 US 527, 70 L Ed 395, 46 S Ct 17.
Before federal district court could say holding of state's highest court rendered
statute invalid as denying equal protection of law, court had to conclude that
distinction relied on by state court was without substance and reason. White
Cleaners & Dyers v Hughes (1934, DC La) 7 F Supp 1017.
33
Presumption of constitutionality did not justify federal court in refusing to follow
state decisions construing state statutes. Golden Eagle Western Lines, Inc. v
Bingaman (1935, DC NM) 14 F Supp 17, affd (1936) 297 US 626, 80 L Ed 928, 56
S Ct 624.
Decision of state court that state liquor act was valid, was binding on federal court
insofar as it construed such act and held it constitutional under state constitution, but
it did not bind federal court insofar as it held act valid under Constitution and laws of
United States. Priemier-Pabst Sales Co. v McNutt (1935, DC Ind) 17 F Supp 708.
24. Validity of state statutes under state constitution
Decision of Supreme Court of Appeals of Virginia, upholding validity of state milk
and cream act, as against contention that act delegated legislative power in violation
of Virginia constitution, was decisive and controlling everywhere. Highland Farms
Dairy, Inc. v Agnew (1937) 300 US 608, 81 L Ed 835, 57 S Ct 549.
Decision of highest court of state upholding validity of state statute under state
constitution was binding on federal courts. Sanford v Poe (1895, CA6 Ohio) 69 F
546, affd (1897) 165 US 194, 41 L Ed 683, 17 S Ct 305, reh den (1897) 166 US 185,
41 L Ed 965, 17 S Ct 604; Treat v Chicago (1904, CA7 Ill) 130 F 443; Stockyards
Nat'l Bank v Bauman (1925, CA8 Neb) 5 F2d 905; Kansas City S. R. Co. v Cornish
(1933, CA10 Okla) 65 F2d 671; Hillsborough County v Keefe (1936, CA5 Fla) 82
F2d 127, cert den (1936) 298 US 679, 80 L Ed 1400, 56 S Ct 946.
After federal court had rendered judgment based on state statute, such judgment
could not be set aside after term at which it was rendered, though state court in
meantime had declared statute unconstitutional. Woods Bros. Const. Co. v Yankton
County (1931, CA8 SD) 54 F2d 304, 81 ALR 300.
Decision of state court that state statute was repealed by state constitutional
amendment was binding on federal court. Bank of California Nat'l Ass'n v
Craddock-Terry Co. (1936, CA9 Cal) 83 F2d 819.
Only with reluctance would federal courts adjudge state statute to be in conflict with
state constitution before question had been considered and determined by state
judiciary. In re Boswell (1937, DC Cal) 20 F Supp 748, affd (1938, CA9 Cal) 96 F2d
239.
Federal courts follow state decisions in determining whether state statute or
municipal ordinance violates state constitution. De Kalb County v Southern Bell Tel.
& Tel. Co. (1972, ND Ga) 358 F Supp 498, affd (1973, CA5 Ga) 478 F2d 700.
2.State Statutory Law
25. Generally
34
Decision of state court is controlling as to meaning and extent of statutory
requirements. Hicklin v Coney (1933) 290 US 169, 78 L Ed 247, 54 S Ct 142;
Morehead v New York (1936) 298 US 587, 80 L Ed 1347, 56 S Ct 918, 103 ALR
1445, reh den (1936) 299 US 619, 81 L Ed 456, 57 S Ct 4 and (ovrld in part by
Olsen v Nebraska (1941) 313 US 236, 85 L Ed 1305, 61 S Ct 862, 133 ALR 1500).
That statute related to commercial law was no reason for not following construction
thereof by highest court of state. Burns Mortg. Co. v Fried (1934) 292 US 487, 78 L
Ed 1380, 54 S Ct 813, 92 ALR 1193.
In federal court, state statute had to be given meaning and effect attributed to it by
highest court of state, as if state court's decision were literally incorporated into
enactment, whatever federal tribunal's opinion as to correctness of state court's
views. Burns Mortg. Co. v Fried (1934) 292 US 487, 78 L Ed 1380, 54 S Ct 813, 92
ALR 1193; Graham v White-Phillips Co. (1935) 296 US 27, 80 L Ed 20, 56 S Ct 21,
102 ALR 24; Gulf Refining Co. v Fox (1936) 297 US 381, 80 L Ed 731, 56 S Ct
510; Tipton v Atchison, T. & S. F. R. Co. (1936) 298 US 141, 80 L Ed 1091, 56 S Ct
715, 104 ALR 831.
Erie R. Co. v Tompkins, did not free federal courts from duty of deciding questions
of state law in diversity cases, but instead placed on them greater responsibility for
determining and applying state laws in all cases within their jurisdiction in which
federal law did not govern. Meredith v Winter Haven (1943) 320 US 228, 88 L Ed 9,
64 S Ct 7.
Construction of state act was properly function of state courts, not to be undertaken
by federal court except when necessary. In re Motor Products Mfg. Corp. (1936,
CA9 Cal) 90 F2d 8, cert den (1937) 302 US 695, 82 L Ed 536, 58 S Ct 13.
Where decision of federal court turned on construction to be given state statutes, it
was bound to give effect to them as interpreted by state courts insofar as they had
authoritatively construed them. In re Freudlait Constr. Co. (1937, CA2 NY) 88 F2d
413.
Construction of state statute by appellate court of state was accepted as binding on
federal court even though if matter were open for federal court's consideration
different conclusion might have been reached. Taplinger v Northwestern Nat'l Bank
(1938, CA3 Pa) 101 F2d 274.
In determining law of state, federal courts did not review decisions of its courts for
error of law or fact, and if line of decisions clearly established rule of law which had
been approved by court of last resort of state, such rule was recognized until it
clearly appeared that it had been overruled by court of last resort. Mangol v
Metropolitan Life Ins. Co. (1939, CA7 Ill) 103 F2d 14.
35
Rule that federal courts accepted statutory constructions by state courts as part of
law of state had grown up and been held with constant reference to rule of stare
decisis, and it was only so far and in such cases as this latter rule could operate that
other had any effect. New England Mut. Life Ins. Co. v Mitchell (1941, CA4 Va)
118 F2d 414, cert den (1941) 314 US 629, 86 L Ed 505, 62 S Ct 60.
Since federal courts would be bound by construction of state statutes by state courts,
they were encouraged to remit construction of state statutes to state courts whenever
there was discretion in federal court so to do, and immediacy of authoritative state
court decision was obvious. McLain v Lance (1944, CA5 Tex) 146 F2d 341, cert den
(1945) 325 US 855, 89 L Ed 1976, 65 S Ct 1183.
When there is state statute covering choice of law which is expected to change
common law choice of law principles, Restatement principles do not control.
Barclays Discount Bank, Ltd. v Levy (1984, CA9 Cal) 743 F2d 722, 39 UCCRS
916.
Unpublished Opinions
Unpublished: Where district court neither neglects to apply state law nor
impermissibly generates its own federal rule to decide case, district court does not
fail to follow commands of Rules of Decision Act. Croft v Old Republic Ins. Co.
(2007, CA4 SC) 2007 US App LEXIS 11519.
26. Amended or repealed statutes
State's highest court's decision that state statute had not been repealed was binding
on federal courts. Williamson v Chicago Mill & Lumber Co. (1931, DC Ark) 51 F2d
551, mod (1932, CA8 Ark) 59 F2d 918; Arkansas ex rel. Norwood v Rust Land &
Lumber Co. (1931, DC Ark) 51 F2d 555.
Federal court would assume that state courts in adopting or recognizing form of
summons following amendment to state statute construed same to be in compliance
with such amendment and followed such assumed construction. O'Neill v Lang
Transp. Corp. (1937, DC Nev) 19 F Supp 477.
27. Application of state construction of similar statute
Explicit holding of state court as to basis of its decision was not disregarded in order
to make decision apply to later statute than one relied on by court. Guaranty Trust
Co. v Blodgett (1933) 287 US 509, 77 L Ed 463, 53 S Ct 244.
Decision of state court construing analogous statute was merely persuasive in federal
court. McNear v Little Red River Levee Dist. No. 2 (1923, CA8 Ark) 293 F 717.
36
Where statute used phrase, meaning of which had been defined by courts of state,
and thereafter highest state court decided cases on theory that statute had meaning as
indicated by early decisions, federal courts treated such decisions as in effect
construction of statute, and followed them, as against contention that question
involved was one of general law. Sims v American Cent. Ins. Co. (1924, CA6 Tenn)
296 F 115, cert den (1924) 265 US 595, 68 L Ed 1197, 44 S Ct 638.
Where federal and state supreme courts were in conflict on similar legislation, and
legislation in controversy had not been construed by state court, federal district court
was not bound by state court's construction of prior, similar legislation. Alliance
Trust Co. v Hall (1935, DC Idaho) 11 F Supp 668.
28. Construction of same or similar statute in different state
Decision of state supreme court construing statute of state prevailed in United States
Supreme Court over previous decision of court of appeals construing similar statute
of another state, though both decisions related to same fraternal order. Supreme
Lodge, Knights of Pythias v Meyer (1924) 265 US 30, 68 L Ed 885, 44 S Ct 432.
That applicable statutory provisions of state law were part of "uniform law" was no
reason for rejecting construction thereof by highest court of state whose law was to
be applied, though federal court disagreed with such construction and though it was
in conflict with decisions of other states having same statutory provisions. Burns
Mortg. Co. v Fried (1934) 292 US 487, 78 L Ed 1380, 54 S Ct 813, 92 ALR 1193.
Marine Nat. Exchange Bank v Kalt-Zimmers Mfg. Co. (1934) 293 US 357, 79 L Ed
427, 55 S Ct 226; Graham v White-Phillips Co. (1935) 296 US 27, 80 L Ed 20, 56 S
Ct 21, 102 ALR 24.
In considering effect of statute adopted from another state decisions of latter state
could not be considered by federal court where there had been no decisions on
subject in adopting state. Kraus v Chicago, B. & Q. R. Co. (1926, CA8 Wyo) 16 F2d
79.
In construing identical statutes of different states federal court followed different
decisions of highest courts of respective states though it resulted in apparently
inconsistent decisions by federal court. Doherty v Bartlett (1936, CA1 NH) 83 F2d
259, cert den (1936) 298 US 676, 80 L Ed 1398, 56 S Ct 941.
On question whether spendthrift trust was liable for alimony and children's support
money where state statutes and state court decisions had not spoken, federal court
had to determine law of state from rule in other jurisdictions, taking into
consideration any decisions of state concerning matters of relevant nature. Schwager
v Schwager (1940, CA7 Wis) 109 F2d 754.
29. Federal court construction prior to state court construction
37
Generally, province of appellate court was only to inquire whether judgment when
rendered was erroneous, but if subsequent to judgment and before decision of
appellate court state law intervened and positively changed rule which governed,
such law had to be obeyed. Vandenbark v Owens-Illinois Glass Co. (1941) 311 US
538, 85 L Ed 327, 61 S Ct 347.
Where federal court had first construed state statute, it was not obliged thereafter to
follow decision of supreme court of state to contrary, although it could recede from
its former opinion and do so. Andrus v Hutchinson (1927, CA5 Tex) 17 F2d 472,
cert den (1927) 274 US 761, 71 L Ed 1339, 47 S Ct 770.
Where later decisions of state courts construing statute had become rule of property,
proper application of comity and effort to avoid conflict between state and federal
jurisdiction federal court was obligated to recede from its former opinion and follow
state court. Andrus v Hutchinson (1927, CA5 Tex) 17 F2d 472, cert den (1927) 274
US 761, 71 L Ed 1339, 47 S Ct 770.
Where suit in federal court required construction of state statute which state supreme
court had not construed, federal court made its own construction. Stone v Interstate
Natural Gas Co. (1939, CA5 Miss) 103 F2d 544, affd (1939) 308 US 522, 84 L Ed
442, 60 S Ct 292, reh den (1940) 308 US 639, 84 L Ed 530, 60 S Ct 381; Terry v
New York Life Ins. Co. (1939, CA8 Mo) 104 F2d 498.
Decision of court of appeals was controlling on court below in spite of subsequent
decision of state courts construing statute involved. Minneapolis Steel & Machinery
Co. v Federal Surety Co. (1927, DC Minn) 22 F2d 712, affd (1929, CA8 Minn) 34
F2d 270.
Federal court would reverse its former decision if necessary when shown that
subsequent decision of highest state court had definitely interpreted statute in
question. Tomes v Barney (1888, CCD NY) 35 F 112; Sanford v Poe (1895, CA6
Ohio) 69 F 546, affd (1897) 165 US 194, 41 L Ed 683, 17 S Ct 305, reh den (1897)
166 US 185, 41 L Ed 965, 17 S Ct 604.
30. State statute enacted to implement federal statutes
Construction of state statute enacted to carry out federal legislation was a local
question. Portneuf-Marsh Valley Canal Co. v Brown (1927) 274 US 630, 71 L Ed
1243, 47 S Ct 692.
3.Absence of State Statute or Decision
31. Generally
In absence of construction of state statute by state courts, federal court would adopt
own construction in determining validity. Lake Superior Consol. Lake Superior
Consol. Iron Mines v Lord (1926) 271 US 577, 70 L Ed 1093, 46 S Ct 627.
38
Where state's highest court had not definitely construed statute, federal court was
free to construe statute for itself. Concordia Ins. Co. v School Dist. (1931) 282 US
545, 75 L Ed 528, 51 S Ct 275.
Where issue of state law had not been determined by state courts, United States
Supreme Court resorted to general policy of state as expressed in its constitution,
statutes and decisions. Ford Motor Co. v Department of Treasury (1945) 323 US
459, 89 L Ed 389, 65 S Ct 347 (ovrld in part by Lapides v Bd. of Regents (2002) 535
US 613, 152 L Ed 2d 806, 122 S Ct 1640, 2002 CDOS 4076, 18 BNA IER Cas 961,
82 CCH EPD P 41001, 15 FLW Fed S 277) and (ovrld as stated in Ku v Tennessee
(2003, CA6 Tenn) 322 F3d 431, 2003 FED App 75P) and (criticized in New
Hampshire v Ramsey (2004, CA1 NH) 366 F3d 1) and (ovrld in part as stated in
Meyers v Tex. (2005, CA5 Tex) 2005 US App LEXIS 9108).
General law of state controlled in absence of state decisions construing statute. North
Philadelphia Trust Co. v Smith (1926, CA3 NJ) 13 F2d 585.
In absence of construction of city ordinance by state's supreme court, federal court
would construe it. Kansas City v Johnson (1934, CA8 Mo) 70 F2d 360, cert den
(1934) 293 US 617, 79 L Ed 706, 55 S Ct 208.
Although there were no Texas cases dealing with question of whether insurer, by
denying liability under uninsured motorist policy waived its rights under consent
clause, federal court was bound to apply Texas law and would attempt to predict
what Texas courts would hold if faced with such issue. Stephens v State Farm Mut.
Auto. Ins. Co. (1975, CA5 Tex) 508 F2d 1363.
In diversity case, district judge's opinion as to uncertain state law should be accorded
substantial deference by appellate court. Jaffe-Spindler Co. v Genesco, Inc. (1984,
CA4 SC) 747 F2d 253.
In absence of state decision construing state statute, statute had to be given
construction consistent with its language. Pullman Co. v Montgomery (1933, DC La)
4 F Supp 88.
Federal courts would construe state law in advance of construction by state court
only if absolutely necessary in discharge of their responsibility, as there was no
finality to their construction of state laws. Cary v Corporation Com. of Oklahoma
(1935, DC Okla) 9 F Supp 709, affd (1935) 296 US 452, 80 L Ed 324, 56 S Ct 300.
Where federal court was to be governed by state law, in absence of precise holding
by state court, federal court had to examine all available data as to what state tribunal
would probably decide under facts of case. Goldman v Postal Tel., Inc. (1943, DC
Del) 52 F Supp 763.
32. Decisions by other federal courts
39
United States Supreme Court was reluctant to construe state statute not construed by
state court because its decision, though disposing of particular case, could not settle
proper construction of statute; when not instructed by some state court decision,
federal Supreme Court would ordinarily follow construction given state statute by
lower federal court. Thompson v Consolidated Gas Utilities Corp. (1937) 300 US
55, 81 L Ed 510, 57 S Ct 364; Henderson Co. v Thompson (1937) 300 US 258, 81 L
Ed 632, 57 S Ct 447.
Federal court would ordinarily follow its own construction of state statute as against
later contrary state decision, but it would follow state decision if it had become rule
of property. Andrus v Hutchinson (1927, CA5 Tex) 17 F2d 472, cert den (1927) 274
US 761, 71 L Ed 1339, 47 S Ct 770.
In absence of controlling construction placed on statutes by highest court of state,
federal court would follow its own rule and rule laid down by Supreme Court of
United States. Security Life Ins. Co. v Brimmer (1929, CA8 Mo) 36 F2d 176, cert
den (1930) 281 US 744, 74 L Ed 1157, 50 S Ct 350; Bush v Bremner (1929, CA8
Minn) 36 F2d 189; Cuttell v Fluent (1931, CA8 Iowa) 51 F2d 974; Clayton v
Colorado & S. R. Co. (1931, CA10 NM) 51 F2d 977, 82 ALR 417; New York Life
Ins. Co. v McCreary (1932, CA8 Neb) 60 F2d 355.
Although determination by District Court concerning law of state in which it sits is
entitled to considerable deference, it is inappropriate for Court of Appeals to defer to
District Court's reading of state law with respect to whether valid security interest
may be created in liquor license, where (1) there do not appear to be any decisions
from state's courts addressing issue, (2) District Court's opinion is contrary to most
of cases decided since enactment of Uniform Commercial Code by various states,
and these cases appear to have been overlooked, (3) District Court's opinion contains
no reference to UCC, nor does it indicate that possible effect of UCC was examined,
and (4) District Court's reliance on particular precedent was misplaced. In re
O'Neill's Shannon Village (1984, CA8 SD) 750 F2d 679, 39 UCCRS 1781.
Federal district court was obliged to follow construction of state statute given by its
Court of Appeals, which construction did not conflict with that of highest state court.
Murphy v Dunklin County (1936, DC Mo) 17 F Supp 128.
33. Decisions by other state construing similar laws
Where there were no Florida decisions as to nature of Massachusetts trust in that
state, Massachusetts decisions were applied. Gutelius v Stanbon (1929, DC Mass) 39
F2d 621.
Federal court in construing Ohio minimum wage law, not construed by Ohio courts,
was not bound to follow construction placed upon similar statutes of other states by
courts of such other states. Walker v Chapman (1936, DC Ohio) 17 F Supp 308, 7
Ohio Ops 116.
40
34. Decision by state court after federal court decision
Where federal court, in absence of decision of state court, held state statute invalid
under state constitution, and state court later upheld validity of statute under state
constitution, federal court was bound to follow state court decision. Sanford v Poe
(1895, CA6 Ohio) 69 F 546, affd (1897) 165 US 194, 41 L Ed 683, 17 S Ct 305, reh
den (1897) 166 US 185, 41 L Ed 965, 17 S Ct 604.
To extent to which federal court is bound to follow state law, federal appellate court
will correct, upon subsequent appeal, error made upon former appeal where such
error is shown by intervening contrary decision of state court. Maryland Casualty
Co. v Hallatt (1964, CA5 Fla) 326 F2d 275, cert den (1964) 377 US 932, 12 L Ed 2d
296, 84 S Ct 1335; Green v American Tobacco Co. (1968, CA5 Fla) 391 F2d 97,
different results reached on reh on other grounds (1969, CA5 Fla) 409 F2d 1166, cert
den (1970) 397 US 911, 25 L Ed 2d 93, 90 S Ct 912 and (criticized in Little v Brown
& Williamson Tobacco Corp. (2000, DC SC) 243 F Supp 2d 480).
Federal court could decide for itself question not adjudicated by state courts
irrespective of foreshadowed decision. Rowan v Galveston (1926, DC Tex) 13 F2d
257, affd (1927, CA5 Tex) 20 F2d 501.
35. Federal question matters
United States Supreme Court would construe state constitution where federal
question was involved and there was no state decision on subject. Porter v Investors
Syndicate (1932) 287 US 346, 77 L Ed 354, 53 S Ct 132.
In federal tax case, decisions by intermediate state appellate courts and state trial
courts are not binding upon federal courts as to questions of state law. Helvering v
Safe Deposit & Trust Co. (1942) 316 US 56, 86 L Ed 1266, 62 S Ct 925, 42-1 USTC
P 10167, 28 AFTR 1256, 139 ALR 1513; Commissioner v Estate of Bosch (1967)
387 US 456, 18 L Ed 2d 886, 87 S Ct 1776, 19 AFTR 2d 1891; Commissioner v
Estate of Bosch (1967, CA2) 382 F2d 295, 67-2 USTC P 12491, 20 AFTR 2d 5987.
In case involving federal labor laws, decision by intermediate state appellate court,
but not one by state trial court, is binding upon federal courts as to questions of state
law. California v Taylor (1957) 353 US 553, 1 L Ed 2d 1034, 77 S Ct 1037, 40 BNA
LRRM 2158, 32 CCH LC P 70732.
Where federal jurisdiction has been based on provisions of bankruptcy laws, isolated
decisions by lower state courts are not binding on federal courts as to questions of
state law, but lower court's decisions should be followed if they are sufficiently
numerous and have consistently reached same result, especially if lower court is one
having statewide jurisdiction over matter which it has decided. Lockhart v Garden
City Bank & Trust Co. (1940, CA2 NY) 116 F2d 658; California Dep't of
Employment v Fred S. Renauld & Co. (1950, CA9 Cal) 179 F2d 605.
41
Lower state court's decision may be binding upon federal courts as to questions of
state law in litigation involving federal constitutional law. McCoy v Providence
Journal Co. (1951, CA1 RI) 190 F2d 760, cert den (1951) 342 US 894, 96 L Ed 669,
72 S Ct 200.
4.Conflicts
36. Generally
Even if there was conflict between decisions of state and those of lower courts,
Supreme Court would lean towards agreement of views with state courts if question
was balanced with doubt. Willing v Binenstock (1937) 302 US 272, 82 L Ed 248, 58
S Ct 175.
When there were two courts of last resort in state, one permanent and one temporary,
decision of permanent one was followed in preference to contrary decision of
temporary one, construing a state statute. Montgomery v McDermott (1900, CA2
NY) 103 F 801.
Where rule of law at earlier date was clear, and where later state decision was of
doubtful application, federal court did not accept uncertain inferences from it in
place of otherwise clear result. In re Ames (1923, CA6 Mich) 289 F 208.
In diversity of citizenship cases, questions relating to conflict of laws were
determined by law of forum. Alcaro v Jean Jordeau, Inc. (1943, CA3 NJ) 138 F2d
767; State Farm Mut. Auto. Ins. Co. v Smith (1942, DC Mo) 48 F Supp 570;
Alexander v Creel (1944, DC Mich) 54 F Supp 652.
Federal Court of Appeals should follow state conflicts rule where action was brought
in diversity. Challoner v Day & Zimmermann, Inc. (1977, CA5 Tex) 546 F2d 26.
37. Conflicting decisions within state courts
Federal court was not bound to follow last of several inconsistent decisions of state
court interpreting laws of that state. Pease v Peck (1856) 59 US 595, 18 How 595, 15
L Ed 518.
Judgment of lower federal court based on construction of state statute by highest
state court was not reversible on review in higher federal court because state court
had reversed itself in meantime. Morgan v Curtenius (1858) 61 US 1, 20 How 1, 15
L Ed 823.
Where state court's decision overruled line of its former decisions, federal court was
not bound to follow last one. Gelpcke v Dubuque (1864) 68 US 175, 1 Wall 175, 17
L Ed 520; Thomson v Lee County (1866) 70 US 327, 3 Wall 327, 18 L Ed 177;
Mitchell v Burlington (1867) 71 US 270, 4 Wall 270, 18 L Ed 350 (ovrld in part by
Brenham v German-American Bank (1892) 144 US 173, 36 L Ed 390, 12 S Ct 559).
42
Where state decisions were in conflict or did not clearly establish local law, federal
court could exercise independent judgment. Edward Hines Yellow Pine Trustees v
Martin (1925) 268 US 458, 69 L Ed 1050, 45 S Ct 543; Risty v Chicago, R. I. & P.
R. Co. (1926) 270 US 378, 70 L Ed 641, 46 S Ct 236.
To extent that decision by lower state court is inconsistent with decision by state's
highest court, lower court's decision need not be followed by federal court.
Helvering v Safe Deposit & Trust Co. (1942) 316 US 56, 86 L Ed 1266, 62 S Ct 925,
42-1 USTC P 10167, 28 AFTR 1256, 139 ALR 1513; Corpus Christi v Hayward
(1940, CA5 Tex) 111 F2d 637, cert den (1940) 311 US 670, 85 L Ed 430, 61 S Ct
30; Legget v Commissioner (1964, CA2) 329 F2d 509, 64-1 USTC P 9337, 13
AFTR 2d 1103; Shelp v National Surety Corp. (1964, CA5 La) 333 F2d 431, cert
den (1964) 379 US 945, 13 L Ed 2d 543, 85 S Ct 439.
Decision of federal court based on construction then placed on state constitution by
highest state court was reversed on appeal if state court had in meantime reversed
itself. American Sugar Ref. Co. v New Orleans (1902, CA5 La) 119 F 691.
Where state decisions were in conflict, federal court followed latest decision, if
vested rights of parties were not acquired under earlier decisions. Jackson v Harris
(1930, CA10 Okla) 43 F2d 513; Morris Plan Bank v Cook (1932, CA4 NC) 55 F2d
176; Alexander v Missouri State Life Ins. Co. (1933, CA7 Ill) 68 F2d 1, cert den
(1934) 292 US 650, 78 L Ed 1499, 54 S Ct 865; Hammerstrom v Toy Nat'l Bank
(1936, CA8 Iowa) 81 F2d 628, cert den (1936) 299 US 546, 81 L Ed 402, 57 S Ct 9;
Linde Air Products Co. v Cameron (1936, CA4 W Va) 82 F2d 22; Layne-Western
Co. v Buchanan County (1936, CA8 Mo) 85 F2d 343; Mutual Life Ins. Co. v
Cunningham (1937, CA8 Iowa) 87 F2d 842.
Federal court may decline to follow intermediate state appellate court decisions
where decisions are in conflict with other decisions by courts of same level. Wickes
Boiler Co. v Godfrey-Keeler Co. (1941, CA2 NY) 121 F2d 415, cert den (1941) 314
US 686, 86 L Ed 549, 62 S Ct 297; United States v Novsam Realty Corp. (1942,
CA2 NY) 125 F2d 456.
38. State law as conflicting with federal law
Decisions of Supreme Court of United States upon question of general law prevailed
over state decisions which did not involve statute. Hartford Fire Ins. Co. v Jones
(1926, CA6 Ky) 15 F2d 1.
State decisions in conflict with decisions of federal Supreme Court were not
applicable in case where federal rule was controlling. Western Union Tel. Co. v
Aldridge (1933, CA9 Cal) 66 F2d 26, 89 ALR 352.
43
Decision of state court construing state statute prevailed over earlier contrary
decision by United States Supreme Court. Tradesmen's Nat'l Bank & Trust Co. v
Johnson (1931, DC Md) 54 F2d 367.
For purposes of 28 USCS § 1652, Fla. Stat. § 768.72(1), which permitted financial
net worth discovery only after party seeking discovery obtained leave of court, was
deemed procedural, rather than substantive statute; federal discovery rules controlled
over Florida statute in diversity case because Florida statute, which circumscribed
discovery, conflicted with federal rule's liberal discovery policy. Ward v Estaleiro
Itajai S/A (2008, SD Fla) 541 F Supp 2d 1344, 21 FLW Fed D 191.
III.APPLICATION OF STATE LAW TO PARTICULAR SUBJECT MATTER
AND PROCEEDINGS
A.Business and Professions
1.In General
39. Generally
Construction by state court of Pennsylvania statute relating to licensing of medical
practitioners as applying to chiropractors was binding on the federal courts.
Steinbach v Metzger (1933, CA3 Pa) 63 F2d 74.
Construction of statute concerning food, drugs, and dairy products was binding on
federal court. Hebe Co. v Calvert (1917, DC Ohio) 246 F 711.
40. Attorneys
Determination by state supreme court of nonjudicial character of application for
admission to bar was binding on United States Supreme Court. In re Summers
(1945) 325 US 561, 89 L Ed 1795, 65 S Ct 1307, reh den (1945) 326 US 807, 90 L
Ed 491, 66 S Ct 94.
State statutes were not applicable to disbarment cases in federal courts. Hertz v
United States (1927, CA8 Minn) 18 F2d 52.
In disbarment proceedings before federal court, disbarment order of state's highest
court is entitled to great weight but is not binding on federal court. Clark v
Washington (1966, CA9 Wash) 366 F2d 678.
In action for brokerage commission involving relationship between attorney and
client and attorney's power to bind client by settlement of lawsuit, state's substantial
interest in defining relationship between attorney and client mandates that principles
of state law be applied; thus, District Court correctly applied state law under 28
USCS § 1652. Glazer v J. C. Bradford & Co. (1980, CA5 Ga) 616 F2d 167.
41. Partnerships
44
State court decisions were not binding on federal court as to meaning of word
"partnership" under federal Revenue Act. Wild v Commissioner (1933, CA2) 62 F2d
777, 3 USTC P 1032, 11 AFTR 1376.
Decisions of Texas court that joint-stock company organized under laws of that state
was partnership were not controlling on federal court in construing federal income
tax law. Burk-Waggoner Oil Ass'n v Hopkins (1924, ND Tex) 296 F 492, 4 AFTR
3851, affd (1925) 269 US 110, 70 L Ed 183, 46 S Ct 48, 1 USTC P 143, 5 AFTR
5663.
42. State agencies, boards and commissions
Interpretation by state court of order of state railroad commission was conclusive on
federal courts. Sutter Butte Canal Co. v Railroad Com. of California (1929) 279 US
125, 73 L Ed 637, 49 S Ct 325.
Presence of physician and attorney on each malpractice tribunal does not deprive out
of state plaintiffs of impartial forum where tribunal is chaired by justice of Superior
Court and physician serving on panel is selected by single justice from list submitted
by State Medical Society consisting only of physicians who practice medicine
outside county where defendant practices or resides or if defendant is medical
institution or facility outside county where said institution or facility is located.
Feinstein v Massachusetts General Hospital (1981, CA1 Mass) 643 F2d 880.
Though acts of state public service commission violative of federal Constitution
were basis of federal court's jurisdiction, that did not require court to ignore state
decisions construing state statutes limiting powers of commission. Puget Sound
International R. & Power Co. v Kuykendall (1923, DC Wash) 293 F 791.
Reasonable construction by railroad commission of its order was binding on federal
court. Ashbury Truck Co. v Railroad Com. (1931, DC Cal) 52 F2d 263, affd (1932)
287 US 570, 77 L Ed 501, 53 S Ct 94.
Federal court was bound by decision of highest court of Louisiana holding that state
highway commission was legal entity and suit against it was not against state.
Farnsworth v Louisiana Highway Com. (1934, DC La) 8 F Supp 11, affd (1935,
CA5 La) 74 F2d 910, cert den (1935) 294 US 729, 79 L Ed 1259, 55 S Ct 638.
Final determination of whether Oklahoma statutes afforded judicial review of rate
orders made by that state's corporation commission rested with Oklahoma supreme
court. Cary v Corporation Com. of Oklahoma (1935, DC Okla) 9 F Supp 709, affd
(1935) 296 US 452, 80 L Ed 324, 56 S Ct 300.
Where decision of state court was tantamount to finding commission's order
prohibiting transportation company from operating without certificate of public
45
convenience was valid, federal court would not prevent enforcement of order.
Oilwell Express Corp. v Railroad Com. of California (1935, DC Cal) 11 F Supp 665.
2.Banks and Banking
43. Generally
Consequences of violation of federal banking statute are governed by federal
common law rather than state law. Deitrick v Greaney (1940) 309 US 190, 84 L Ed
694, 60 S Ct 480, reh den (1940) 309 US 697, 84 L Ed 1036, 60 S Ct 611 and
(superseded by statute as stated in Gunter v Hutcheson (1982, CA11 Ga) 674 F2d
862, CCH Fed Secur L Rep P 98654).
Federal laws prevailed in distribution of assets of national bank. Gulley v Wisdom
(1934, CA5 Miss) 69 F2d 495.
Decision of state supreme court construing state bank collection code was binding on
federal court. Marlboro Trust Co. v Elliott (1936, CA4 SC) 86 F2d 315.
44. Bank in receivership
Whether notes endorsed to and discounted by bank remained property of endorser so
as not to pass to receiver of bank was determined by federal decisions. Bryant v
Williams (1926, DC NC) 16 F2d 159.
In suit by national bank receiver for collection of debt and upon counterclaim by
defendant, rights of parties were adjudged in accordance with law of state. Willing v
Lupin Bldg. & Loan Asso. (1937, DC Pa) 20 F Supp 774.
45. Powers and duties
Extent of national banks' power was determined by interpretation of federal statutes
in light of policy therein expressed, and views of state courts on power of local
corporations had no relevance except as Congress expressly made them applicable.
Downey v Yonkers (1939, CA2 NY) 106 F2d 69, affd (1940) 309 US 590, 84 L Ed
964, 60 S Ct 796, reh den (1940) 310 US 656, 84 L Ed 1420, 60 S Ct 1071.
Whether state banks were given authority to pledge assets to secure deposits of
public moneys of political subdivision under state laws was determined by state's
highest court. Eckerson v Utter (1934, DC Idaho) 7 F Supp 201, affd (1935, CA9
Idaho) 78 F2d 307.
46. Priority of claims
Federal decisions controlled over state decisions in determining priority of claim
against national bank. Wisdom v Keen (1934, CA5 Miss) 69 F2d 349.
46
Decision of Louisiana court as to preference against domestic bank was binding on
federal court. Interstate Trust & Banking Co. v Jones County (1935, CA5 La) 77 F2d
806, cert den (1935) 296 US 608, 80 L Ed 431, 56 S Ct 124.
In securing creditor's action against insolvent state bank, construction of statutes by
state court for guidance of its administrative officers, declaring "bankruptcy" rule
rather than "chancery" rule governed application of dividends, was rule of
administration to be followed by federal court. Reconstruction Finance Corp. v
Farmers State Bank (1936, CA5 Tex) 80 F2d 978.
47. Rights and remedies of depositors
Rule in some of states that bank was estopped to rescind a pledge to depositor until
he was paid in full was directly in face of policy of National Bank Act. Downey v
Yonkers (1939, CA2 NY) 106 F2d 69, affd (1940) 309 US 590, 84 L Ed 964, 60 S
Ct 796, reh den (1940) 310 US 656, 84 L Ed 1420, 60 S Ct 1071.
Whether deposit was one of "public money" for which national bank may pledge its
assets as security under 12 USCS § 90 was determined as federal question and not
according to law of state where security was given. Federal Deposit Ins. Corp. v
Tremaine (1943, CA2 NY) 133 F2d 827.
48. Stockholders' liability
In suit in federal court by receiver of national bank to enforce stockholder's liability,
local substantive law governing property rights in stock was observed. Pufahl v
Estate of Parks (1936) 299 US 217, 81 L Ed 133, 57 S Ct 151.
Lower state court's interpretation of statute to effect that certificate of state's
superintendent of banks levying assessment against stockholders was accorded that
presumption of correctness which attached to official acts of administrative officers,
would be followed by federal court until reversed by higher court of state. Broderick
v American General Corp. (1934, CA4 Md) 71 F2d 864, 94 ALR 1359.
Since Supreme Court of Arkansas had clearly held that three-year statute of
limitations applied to action to enforce bank stock liability, it was duty of court of
appeals to follow and affirm judgment for defendant in such action begun more than
three years after assessment was made. Futrell v Branson (1939, CA8 Ark) 104 F2d
409.
Whether suit to enforce double liability of stockholders in state bank could be
enforced in federal equity court was determined by principles as administered in
federal court. Reconstruction Finance Corp. v Central Republic Trust Co. (1935, DC
Ill) 11 F Supp 976.
47
In suit in district court for Pennsylvania by receiver of insolvent national bank
against stockholder to recover stock assessment, law of Pennsylvania that pleading
could not be amended to set up new cause of action had to be followed. Willing v
Provident Trust Co. (1937, DC Pa) 21 F Supp 237.
3.Corporations
a.Private Corporation
49. Generally
Where organization was recognized as corporation under laws of state, it was such
for purposes of suing and being sued in federal courts. W. L. Wells Co. v Gastonia
Cotton Mfg. Co. (1905) 198 US 177, 49 L Ed 1003, 25 S Ct 640.
Decisions of state courts construing statutes relative to corporations were binding on
federal courts; in absence of such decisions federal courts exercised their
independent judgment in construing such laws. In re Phoenix Hotel Co. (1935, DC
Ky) 13 F Supp 229, affd (1936, CA6 Ky) 83 F2d 724, cert den (1936) 299 US 568,
81 L Ed 418, 57 S Ct 31.
Decision of state court construing its constitution and laws relating to domestic
corporations was controlling. Harman v Himes (1935, Dist Col App) 64 App DC
252, 77 F2d 375.
50. Construction of charter, articles and bylaws
Applicability of provision as to stock preference in charter of public utility holding
company having been simplified under Public Utility Holding Company Act was
matter of federal law. Otis & Co. v SEC (1945) 323 US 624, 89 L Ed 511, 65 S Ct
483, reh den (1945) 324 US 887, 89 L Ed 1436, 65 S Ct 710.
Holding of highest judicial authority of state regarding defense of ultra vires was
followed by federal court. Hummel v Warren Steel Casting Co. (1925, CA8 Mo) 5
F2d 451.
51. Dissolution and receivership
Kansas supreme court's dissolution of corporation in quo warranto proceedings and
appointment of receivers therefor was construction of the state's constitution and
statutes, binding upon the federal court. Lillard v Lonergan (1934, CA10 Kan) 72
F2d 865, cert den (1934) 293 US 615, 79 L Ed 704, 55 S Ct 147.
Federal district court in Texas was bound by Texas decisions as to what constituted
such insolvency as was necessary to make directors of a corporation trustees for
benefit of creditors. Conway v Bonner (1939, CA5 Tex) 100 F2d 786, cert den
(1939) 307 US 632, 83 L Ed 1515, 59 S Ct 835.
48
State court construction of state statute relating to responsibility of trustees of
dissolved corporation was binding on federal court. Trower v Stonebraker-Zea Live
Stock Co. (1937, DC Okla) 17 F Supp 687.
52. Foreign corporations
Equal protection of foreign corporation was federal question, and federal court was
not bound by state court decisions. Hanover Fire Ins. Co. v Harding (1926) 272 US
494, 71 L Ed 372, 47 S Ct 179, 49 ALR 713.
Mississippi statute which barred from Mississippi courts foreign corporation doing
business in state without complying with state qualifying law precluded corporation's
access to Mississippi federal district court. Woods v Interstate Realty Co. (1949) 337
US 535, 93 L Ed 1524, 69 S Ct 1235 (criticized in McKenzie v Hawaii Permanente
Med. Group, Inc. (1998, DC Hawaii) 29 F Supp 2d 1174).
State statute precluding foreign corporations which had not filed their articles of
incorporation with secretary of state from maintaining suits "in any of the courts of
this state" did not apply to federal courts. Industrial Finance Corp. v Community
Finance Co. (1923, CA5 Tex) 294 F 870.
Federal courts were bound by decision of state court holding contract of foreign
corporation invalid under state law. Midland Linseed Products Co. v Warren Bros.
Co. (1925, CA6 Tenn) 46 F2d 870.
State statute prohibiting foreign corporations, not complying with certain
requirements, from doing business in state, but not declaring contracts made without
such compliance void, did not preclude enforcement of such a contract in the federal
courts. Louis Ilfeld Co. v Union P. R. Co. (1927, CA8 Wyo) 23 F2d 65, cert den
(1928) 276 US 635, 72 L Ed 743, 48 S Ct 420.
Federal courts follow construction of state statutes regulating operation of foreign
corporations within their jurisdictions given them by state courts. Colbert v Toll
(1929, CA6 Tenn) 31 F2d 837.
United States Supreme Court accepted decision of highest court of state as to what
constituted "doing business" in that state within meaning of its laws imposing
preliminary conditions on foreign corporations, but would determine for itself
whether what was done by particular corporation was interstate commerce, and
whether state requirements as applied to it were repugnant to commerce clause.
Edgewater Realty Co. v Tennessee C., I. & R. Co. (1943, DC Md) 49 F Supp 807.
State laws making certain acts conditions precedent to right of foreign corporation to
do business in state are applied in federal courts. Tennis Bros. Co. v Wetzel & T. R.
Co. (1905, CCD W Va) 140 F 193, affd (1906, CA4 W Va) 145 F 458.
49
53. Stockholders' rights and liabilities
New Jersey statute providing for security for costs in dissenting stockholders' suit
did not violate federal Constitution and was binding upon federal district court in
diversity action; district court order refusing to apply statute and denying security for
costs was appealable. Cohen v Beneficial Industrial Loan Corp. (1949) 337 US 541,
93 L Ed 1528, 69 S Ct 1221 (criticized in R.H.D. v S.F. (In re Baby K.) (1998, Utah
App) 967 P2d 947, 354 Utah Adv Rep 37).
Whether stockholders' liability was asset of creditors or stockholders depended on
law of state where corporation was organized. In re Stuart (1921, CA6 Ohio) 272 F
938.
Federal court, bound by rule of Erie R. Co. v Tompkins, was powerless to afford aid
to stockholder until reclassification reached that degree of unfairness where it
amounted to cancellation of preferred stockholders' accumulated unpaid dividends
without adequate compensation therefor under law, either by way of share in equity
of surviving corporation or by payment of money under the state corporation law.
Hottenstein v York Ice Machinery Corp. (1943, CA3 Del) 136 F2d 944.
Rights of members of corporation were determined by law of state of incorporation.
Haynes v Fraternal Aid Union (1929, DC Kan) 34 F2d 305.
In shareholders' derivative suit brought on behalf of Canadian corporation against its
directors and American corporation, District Court will apply Canadian law since,
under 28 USCS § 1652, federal court must apply conflict of laws rules of state in
which it sits and state court in this case would undoubtedly apply law of place of
incorporation which, in this case, is Canada. Messinger v United Canso Oil & Gas,
Ltd. (1980, DC Conn) 486 F Supp 788.
b.Public Corporations
54. Generally
On question whether act of Congress relating to composition of debts of "local
taxing agencies" was applicable to cities in Florida, decisions of supreme court of
that state defining cities in that state to be "taxing agencies," and distinguishing
between taxing agencies and political subdivisions, were binding upon federal
district court. In re Ft. Lauderdale (1938, DC Fla) 23 F Supp 229.
55. Construction of charter
Construction of city charter by state court governed. St. Cloud Public Service Co. v
St. Cloud (1924) 265 US 352, 68 L Ed 1050, 44 S Ct 492.
56. Liabilities
50
State decision that municipal corporation was not liable for personal injuries
resulting from defects in sidewalks was binding on federal court. Detroit v Osborne
(1890) 135 US 492, 34 L Ed 260, 10 S Ct 1012.
Extent of liability of governmental subdivision was determined in federal courts by
decisions of the highest courts of state. Layne-Western Co. v Buchanan County
(1936, CA8 Mo) 85 F2d 343.
57. Powers and duties
Federal court followed state court decisions on duty of city to keep streets in
repair. Detroit v Osborne (1890) 135 US 492, 34 L Ed 260, 10 S Ct 1012.
Decisions of state court as to obligation which could be imposed on a city by a
statutory commission was binding on federal courts. Boston v McGovern (1923,
CA1 Mass) 292 F 705, cert den (1924) 265 US 581, 68 L Ed 1190, 44 S Ct 456.
In determining power of city to take loan from federal government, federal court was
bound by local law as interpreted by state court. Arkansas-Missouri Power Co. v
Kennett (1935, CA8 Mo) 78 F2d 911, later app (CA8 Mo) 113 F2d 595, 3 CCH LC
P 60118.
Powers and liabilities of municipal corporations were determined by settled
decisions of highest courts of state. Mathewes v Port Utilities Com. (1929, DC SC)
32 F2d 913.
58.--Authority to issue warrants
State decision as to power of county to issue warrants under state statute was
controlling in federal court. Franklin County v Harriman Nat'l Bank (1927, CA8
Ark) 19 F2d 182, cert den (1927) 275 US 542, 72 L Ed 416, 48 S Ct 37.
59.--Bonding authority
Validity of municipal bonds arising in suit in federal court was determined by law as
judicially declared by the highest court of state where the bonds were issued. Board
of Education v James (1931, CA10 Okla) 49 F2d 91.
State court's construction of statute and decision as to power of county to issue
funding bonds supplemental to original issue of such bonds was binding on federal
court in an action involving bonds of the same kind. Sovereign Camp, W. O. W. v
Gillespie (1937, CA8 Ark) 87 F2d 944, cert den (1937) 301 US 698, 81 L Ed 1353,
57 S Ct 925.
In considering whether municipal bond issue was legal, federal court could not
ignore decision of highest state court upholding issue. Interstate Power Co. v
51
Cushing (1935, DC Okla) 12 F Supp 806, app dismd (1935, CA10 Okla) 82 F2d
1012.
60.--Debt limitation
Decision of state court that city had not exceeded its debt limit was controlling.
Belton v Brown-Crummer Inv. Co. (1927, CA5 Tex) 17 F2d 70.
61.--Ordinance construction and validity
Decision of highest court of state determining validity of municipal ordinance under
state statutes and Constitution was binding on federal courts. Opelika v Opelika
Sewer Co. (1924) 265 US 215, 68 L Ed 985, 44 S Ct 517.
B.Bonds, Bills and Notes
1.Commercial Paper
62. Generally
State statute providing that recovery could not be had against drawer of bill of
exchange, upon dishonor of same, until maturity would not be binding on federal
courts. Watson v Tarpley (1856) 59 US 517, 18 How 517, 15 L Ed 509.
Federal common law rather than state law governs liability to Federal Government
on private commercial paper. Royal Indem. Co. v United States (1941) 313 US 289,
85 L Ed 1361, 61 S Ct 995, 41-1 USTC P 9487, 25 AFTR 1259, reh den (1941) 314
US 708, 86 L Ed 565, 62 S Ct 52, 27 AFTR 303.
Decisions of a state's courts since enactment of Uniform Negotiable Instruments law
in state were controlling in federal courts as authoritative interpretations of state
statute. New Port Richey v Fidelity & Deposit Co. (1939, CA5 Fla) 105 F2d 348,
123 ALR 1352.
State laws governing manner of protest on bills of exchange were applied in federal
courts. Brown v Van Braam (1797) 3 US 344, 3 Dall 344, 1 L Ed 629.
63. Alteration
Right of holder to recover on materially altered note had to be determined in
accordance with law of state where note was executed. Savings Bank v National
Bank of Goldsboro (1925, CA4 NC) 3 F2d 970, 39 ALR 1374.
64. Construction and validity
Where note was executed and delivered in Florida, and transferee brought suit
against maker in United States district court in Pennsylvania, negotiable quality of
note was to be determined by law of Florida as construed by supreme court of
52
Florida, where statutory provisions on point [Uniform Negotiable Instruments Law]
were same in both states, and decisions of supreme court of Florida were in conflict
with decisions of Pennsylvania courts; district court held that Pennsylvania statutes
as interpreted by courts of Pennsylvania controlled, and court of appeals did not
adopt construction of act by courts of either state, but decided case on general
principles of law merchant. Burns Mortg. Co. v Fried (1934) 292 US 487, 78 L Ed
1380, 54 S Ct 813, 92 ALR 1193.
That point of law in question concerns construction or validity of promissory notes
was no reason for not applying predecessor of 28 USCS § 1652; and that applicable
statutory provisions of state were part of uniform negotiable instruments law was no
reason for rejecting construction of such statutory provisions by highest court of
state whose laws were to be applied, though federal court disagreed with such
construction, and though it was in conflict with decisions of courts of other states
construing same statutory provisions. Marine Nat'l Exchange Bank v Kalt-Zimmers
Mfg. Co. (1934) 293 US 357, 79 L Ed 427, 55 S Ct 226; Graham v White-Phillips
Co. (1935) 296 US 27, 80 L Ed 20, 56 S Ct 21, 102 ALR 24.
65. Obligations of United States
Federal common law rather than state law applies in litigation involving United
States Government commercial paper. Clearfield Trust Co. v United States (1943)
318 US 363, 87 L Ed 838, 63 S Ct 573 (superseded by statute as stated in
Pennsylvania, Dep't of Public Welfare v United States (1986, CA3 Pa) 781 F2d
334); National Metropolitan Bank v United States (1945) 323 US 454, 89 L Ed 383,
65 S Ct 354.
Litigation with respect to government paper does not, merely because it is suit
between private litigants, necessarily preclude, in all situations, presence of federal
interest, to be governed by federal law. Bank of America Nat'l Trust & Sav. Ass'n v
Parnell (1956) 352 US 29, 1 L Ed 2d 93, 77 S Ct 119.
In action by United States against bank to recover amount of adjusted service loan
checks collected by defendant from treasurer, rights and liabilities of parties were to
be determined according to law of state where the check was delivered and
negotiated. Security-First Nat'l Bank v United States (1939, CA9 Cal) 103 F2d 188.
Check in payment for services on works progress administration was drawn by
United States on treasurer of United States and was cashed on forged endorsement at
store which endorsed it to trust company which in turn collected it from United
States; in action by United States against trust company to recover amount of said
check, federal law and not law of state where transaction occurred was applicable,
and under federal law delay of United States in giving notice of the forgery did not
bar its right to recovery. United States v Clearfield Trust Co. (1942, CA3 Pa) 130
F2d 93, affd (1943) 318 US 363, 87 L Ed 838, 63 S Ct 573 (superseded by statute as
53
stated in Pennsylvania, Dep't of Public Welfare v United States (1986, CA3 Pa) 781
F2d 334).
66. Transfer; bona fide purchasers
Statutory rule of state as to bona fide purchase of note was applicable in federal
court in determining whether there was issue for jury. Mack v Dailey (1924, CA2
NY) 3 F2d 534.
In action brought by livestock commission company against Minnesota bank seeking
damages for fraud in transfer of checks to defendant bank, District Court was
required to rely on Minnesota law as controlling since events leading to initiation of
action in Minnesota courts had arisen in the state of Minnesota. Olsen-Frankman
Livestock Marketing Service, Inc. v Citizens Nat'l Bank (1979, CA8 Minn) 605 F2d
1082, 27 UCCRS 458.
Rights of parties under pension checks on which endorsements were forged in New
York were determined by laws of that state. United States v Kings County Trust Co.
(1934, DC NY) 8 F Supp 72.
67. Warehouse receipts
Negotiability of warehouse receipts was determined by state law. Bache v Hinde
(1925, CA6 Ky) 6 F2d 508, cert den (1925) 269 US 581, 70 L Ed 423, 46 S Ct 106.
2.Bonds
68. Generally
Right of action on pilot's bond required by state statute was controlled by state
decisions. Moody ex rel. United States v Megee (1929, DC Tex) 31 F2d 117, affd
(1930, CA5 Tex) 41 F2d 515.
Predecessor of 28 USCS § 1652 was confined to "trials at common law," and did not
apply to construction of injunction bond. Travelers Mut. Travelers Mut. Casualty
Co. v Skeer (1938, DC Mo) 24 F Supp 805, app dismd (1939, CA8 Mo) 106 F2d
1017.
69. Contractors and subcontractors
Federal court followed decisions of state court as to right under statute of
subcontractor to sue on contractor's bond. Consolidated Cut Stone Co. v Hartford
Acci. & Indem. Co. (1933, CA10 Okla) 62 F2d 975, cert den (1933) 289 US 743, 77
L Ed 1490, 53 S Ct 689.
State court's determination as to who were "subcontractors" and "materialmen"
within state statute relating to highway contractor's bond was binding on federal
court. Northwest Roads Co. v Clyde Equipment Co. (1935, CA9 Or) 79 F2d 771.
54
Whether laborers and materialmen on public improvements were entitled to liens
was question of general law in absence of controlling state statute. United States
Fidelity & Guaranty Co. v Sweeney (1935, CA8 Mo) 80 F2d 235.
State court's decision that state statute describing service of notice of claim against
highway contractor's bond for materials furnished would be liberally construed was
binding on court of appeals. American Surety Co. v Gilmore Oil Co. (1936, CA10
NM) 83 F2d 249.
In construing state statute requiring bond of public building and works projects
contractors, federal courts were bound by decisions of state supreme court's holding
that state statute was substantially adoption of parent federal act and that state
legislature had to be deemed to have adopted authoritative interpretations of the
federal act. National Surety Corp. v Wunderlich (1940, CA8 Minn) 111 F2d 622.
State law was controlling in action on highway contractor's bond. Warren County
use of Skinner v Southern Surety Co. (1929, DC Pa) 34 F2d 168.
70. Depository
In action in which United States was asserting priority, decision of state court,
insofar as it construed statute requiring foreign surety companies to deposit
securities for benefit of local creditors was conclusive upon federal Supreme Court.
United States v Knott (1936) 298 US 544, 80 L Ed 1321, 56 S Ct 902, 104 ALR 741.
Federal court followed state law on question of liability under depository bond.
Douglass v Thurston County (1936, CA9 Wash) 86 F2d 899.
In determining liability of sureties on bonds of national bank given to secure funds
of county depositor as required by state law, and liability of receiver of bank, and in
applying equitable doctrine of subrogation, state statutes and decisions bound federal
court. Douglass v Thurston County (1936, CA9 Wash) 86 F2d 899.
71. Drainage or irrigation district
State court decision was not binding upon federal courts on question of validity of
drainage district bonds that had been issued and sold before the decision was
rendered. Duval Cattle Co. v Hemphill (1930, CA5 Fla) 41 F2d 433.
Rights of nonresident holder of irrigation district's bonds were measured by state
statute and state court's decisions, but neither statute nor decisions could prevent
nonresident from enforcing his rights in federal court, or affect procedure therein.
Divide Creek Irr. Dist. v Hollingsworth (1934, CA10 Colo) 72 F2d 859, 96 ALR
937.
55
Where question was as to nature of obligation of bonds issued by irrigation district,
and there was no interpretation of statute by state supreme court at time bonds in
litigation were issued, federal district court would exercise its independent judgment
as to meaning of statute under which bonds were issued, although subsequent to time
such bonds were issued the state supreme court had rendered conflicting decisions
under the statute. Judith Basin Irr. Dist. v Malott (1934, CA9 Mont) 73 F2d 142, 97
ALR 504.
State supreme court's construction of statute covering bonds of irrigation districts
were binding on federal court. Denver-Greeley Valley Irr. Dist. v McNeil (1936,
CA10 Colo) 80 F2d 929.
72. Interest
If bond was not usurious by law of place where payable, plea of usury could not be
sustained in action thereon, unless it alleged that place of payment was inserted as
shift or device to evade law of place where bond was made. Junction R. Co. v Bank
of Ashland (1871) 79 US 226, 12 Wall 226, 20 L Ed 385.
State court's determination of liability for interest on county treasurer's bond was
adopted by federal court. Aetna Casualty & Surety Co. v Illinois (1934, CA7 Ill) 72
F2d 452.
Interest on claims of laborers and materialmen was allowed in action on public
contractor's bond according to law of state where contract was made or to be
performed. United States use of United States Rubber Co. v Ambursen Dam Co.
(1933, DC Cal) 3 F Supp 548.
73. Mortgage
In suit in federal court in Georgia on corporate mortgage bonds issued in Georgia,
where there was no applicable state statute, federal court would determine for itself
what was proper test of their negotiability; authorities on negotiability of private
promissory bonds were reviewed. Gerrish v Atlantic Ice & Coal Co. (1935, CA5 Ga)
80 F2d 648.
74. Official
Federal common law rather than state law controls on question of who may sue on
postmaster's bond. United States use of Midland Loan Finance Co. v National Surety
Corp. (1940) 309 US 165, 84 L Ed 677, 60 S Ct 458.
In action on sheriff's bond for personal injury inflicted by sheriff in making arrest,
federal court could apply the state law with respect to liability. Bassinger v United
States Fidelity & Guaranty Co. (1932, CA8 Neb) 58 F2d 573, cert den (1932) 287
US 622, 77 L Ed 540, 53 S Ct 21.
56
In respect to official bonds of state officers, law of state where official gives bond
was followed by federal courts. Beckley v Moran (1932, CA4 W Va) 61 F2d 238.
It is well settled that liability on official bond required by state law is governed, even
in federal courts, by statutes and decisions of state requiring bond. Douglass v
Thurston County (1936, CA9 Wash) 86 F2d 899; United States Fidelity & Guaranty
Co. v Whittaker (1925, CA9 Mont) 8 F2d 455, cert den (1926) 270 US 653, 70 L Ed
782, 46 S Ct 352; Bassinger v United States Fidelity & Guaranty Co. (1932, CA8
Neb) 58 F2d 573, cert den (1932) 287 US 622, 77 L Ed 540, 53 S Ct 21; Beckley v
Moran (1932, CA4 W Va) 61 F2d 238; American Nat'l Bank & Trust Co. v United
States Fidelity & Guaranty Co. (1934, DC Ala) 7 F Supp 578; Hamden v American
Surety Co. (1935, DC Conn) 9 F Supp 733, affd (1937, CA2 Conn) 93 F2d 482, cert
den (1938) 303 US 648, 82 L Ed 1109, 58 S Ct 647.
Questions of liability of sureties on official bond of county sheriff were determined
by law of the state. Missouri ex rel. De Vault v Fidelity & Casualty Co. (1939, CA8
Mo) 107 F2d 343.
75. School
Rights of bona fide holders of school bonds was governed by general commercial
law upon which it was duty of federal court to exercise independent judgment. Board
of Education v James (1931, CA10 Okla) 49 F2d 91.
Where bonds were issued by county board of education prior to any decision by state
court that legislature could not authorize such board to issue bonds to fund past
indebtedness, federal court would determine for itself whether such bonds in hands
of innocent purchasers, bought in face of legislative act and a validating decree, were
valid. Board of Public Instruction v Gillespie (1936, CA5 Fla) 81 F2d 586.
In determining validity of school bonds, federal court was not bound by state court
decision rendered subsequent to their issuance holding them invalid, where decision
was not res judicata. National City Bank v Board of Public Instruction (1934, DC
Fla) 11 F Supp 570.
76. United States government
Federal law governed interpretation of rights and obligations created by government
bonds, and therefore governed question whether bonds were overdue when
presented; however state law applied as to burden of proof and good faith. Bank of
America Nat'l Trust & Sav. Ass'n v Parnell (1956) 352 US 29, 1 L Ed 2d 93, 77 S Ct
119.
Federal law determines whether or not husband who purchased federal savings
bonds and named brother beneficiary committed fraud barring brother from taking
bonds on husband's death, but in applying federal standard, federal court will be
57
guided by state law insofar as party interests of widow created by state law are
concerned. Yiatchos v Yiatchos (1964) 376 US 306, 11 L Ed 2d 724, 84 S Ct 742.
Absent fraud, federal regulations creating right of survivorship in United States
savings bonds issued in co-ownership form override or preempt any inconsistent
state property law; contrary result would fail to give effect to term or condition under
which federal bond is issued. United States v Chandler (1973) 410 US 257, 35 L Ed
2d 247, 93 S Ct 880, 73-1 USTC P 12902, 31 AFTR 2d 1370.
Rights and liabilities arising from United States government bonds are governed by
federal rather than by state law. Guldager v United States (1953, CA6 Mich) 204
F2d 487.
Savings bond issued by United States was federal contract which was necessarily
controlled by federal law. United States v Dauphin Deposit Trust Co. (1943, DC Pa)
50 F Supp 73.
C.Contracts
1.In General
77. Generally
Whether contract could be taken advantage of by a third person was a question ruled
by local law. Gravelle Const. Co. v Board of Comm'rs of Maintenance Dist., etc.
(1936, CA8 Ark) 82 F2d 391.
Where jurisdiction of federal court in suit involving construction of state statutes as
applied to state contracts was invoked on ground of diversity of citizenship, and
there was no allegation that state statutes involved, or state constitution impaired,
obligation of contract, in violation of federal Constitution, parties and federal courts
had to search for and apply entire body of substantive law governing an identical
action in state courts. Women's Catholic Order of Foresters v Special School Dist.
(1939, CA8 Ark) 105 F2d 716.
78. Accord and satisfaction
Whether employee's endorsement of check received from employer constituted an
accord and satisfaction precluding recovery on claim for overtime was held
determinable under law of state where services were rendered and checks made and
cashed. Ferryboatmen's Union of California v Northwestern P. R. Co. (1936, CA9
Cal) 84 F2d 773.
79. Capacity to contract
Decision of state supreme court that oil and gas lease conveyed interest in land
which trustees of state hospital were without authority to do would be followed by
federal court. Oil Products Corp. v Conner (1936, CA5 Miss) 83 F2d 985.
58
Whether insane person not yet adjudged insane was capable of entering into contract
was matter to be determined by state courts. Kevan v John Hancock Mut. Life Ins.
Co. (1933, DC Mo) 3 F Supp 288.
Validity of contract entered into by person not of sound mind was decided in federal
courts on state decisions. Edwards v Davenport (1883, CCD Iowa) 4 McCrary 34, 20
F 756.
80. Construction
Construction given contract by highest court of state was followed in federal courts
if such contract related to sale of property and contained words or phrases given
definite meaning by state decisions, thus having become rules of property within
state. Keene Five Cent Sav. Bank v Reid (1903, CA8 Kan) 123 F 221, cert den
(1903) 191 US 567, 48 L Ed 305, 25 S Ct 841.
Whether contract was such that certain creditors of one party could adopt it as being
made for their benefit was to be determined by law of state. M. E. Smith & Co. v
Wilson (1925, CA8 Colo) 9 F2d 51.
Validity and construction of conditional sale contract, as affecting right of trustee in
bankruptcy, had to be determined under state law. In re Pointer Brewing Co. (1939,
CA8 Iowa) 105 F2d 478.
If party made contract in state, to be executed therein, containing terms which had
been defined by highest court of such state, this definition was held to have been
written into his contract. American Nat'l Bank & Trust Co. v United States Fidelity
& Guaranty Co. (1934, DC Ala) 7 F Supp 578.
State court's decision as to nature of obligation under its laws, as to whether it was
joint or several, had to be accepted by federal courts. Fournet v De Vilbliss (1938,
DC La) 24 F Supp 60.
81.--Alteration or modification
Rule in state of Michigan that court of laws was without jurisdiction to reform
written instrument was applicable to federal courts in that state. United States v
Traugott Schmidt & Sons (1923, DC Mich) 291 F 382.
In action by plaintiff corporation seeking to recover costs of repairing termite
damage from defendant contractor, federal court will, under 28 USCS § 1652, apply
state law in determining that renewal notice sent by defendant did not constitute
alteration or modification of contract in plaintiff's favor. Sacred Heart Southern
Missions, Inc. v Terminix International, Inc. (1979, ND Miss) 479 F Supp 348.
82. Damages
59
While it is true that federal court sitting in diversity may diverge from existing
precedent where there is sufficient evidence that the highest state court would be
willing to entertain change in its common law, federal court should proceed with
great caution when effect of its ruling would be to broaden law beyond point where
any other court has yet ventured; thus, while much has been written about presumed
trend toward making punitive damages more easily obtainable in contract litigation,
it cannot be assumed on such scant evidence that state's highest court would adopt
such rule with its sweeping implications, particularly where case law suggest that
state's courts have been cautious in their approach to availability of punitive damages
in contract claims. W.A. Wright, Inc. v KDI Sylvan Pools, Inc. (1984, CA3 NJ) 746
F2d 215.
In action for damages for fraud in inducing plaintiffs to enter into motion picture
licensing agreement, rights of parties, being matter of substantive law, were
determined by law of state as interpreted by its highest courts. Oxnard Theatres, Inc.
v Paramount Pictures, Inc. (1938, DC Cal) 24 F Supp 44.
83. Impairment by states
Existence of contract claimed to be impaired depended on state law and decisions.
Appleby v New York (1926) 271 US 364, 70 L Ed 992, 46 S Ct 569.
On question of state impairing obligation of contracts, state court's construction of
contract was not binding on federal court. Larson v South Dakota (1929) 278 US
429, 73 L Ed 441, 49 S Ct 196.
State decisions impairing contracts were not followed. Perry v Samson (1926, DC
Ala) 11 F2d 655, affd (1927, CA5 Ala) 17 F2d 1.
84. Interest
Where suit was commenced in state court of Minnesota to cancel contract, made in
Minnesota, under usury laws of Minnesota, and defendant removed case to district
court, right of plaintiff under usury statutes of Minnesota, as construed by supreme
court of Minnesota, were applied. Missouri, Kansas & Texas Trust Co. v Krumseig
(1899) 172 US 351, 43 L Ed 474, 19 S Ct 179.
Where interest is not specified in contract, but is awarded merely as damages for
breach thereof, rate of interest is to be computed according to law of state where
court rendering judgment is located. Federal Surety Co. v A. Bentley & Sons Co.
(1931, CA6 Ohio) 51 F2d 24, 78 ALR 1041; Sears v Greater New York
Development Co. (1931, CA1 Mass) 51 F2d 46, cert den (1931) 284 US 668, 76 L
Ed 565, 52 S Ct 42; Jones v Foster (1934, CA4 Va) 70 F2d 200, cert den (1934) 293
US 558, 79 L Ed 659, 55 S Ct 70.
60
Construction by highest state court of statute declaring policy of state toward illegal
interest was followed in federal court. Atwood v Deming Inv. Co. (1932, CA5 Tex)
55 F2d 180.
Where jurisdiction of federal court was based upon diversity of citizenship and
nature of action was for money due on account and interest was not fixed in some
binding manner, law of state was applied in respect of allowance of interest. T. & M.
Transp. Co. v S. W. Shattuck Chemical Co. (1947, CA10 Colo) 158 F2d 909.
85. Law of forum
Where jurisdiction rested upon diversity of citizenship, substantive rights of parties
were determined according to local law. Waldron v Aetna Casualty & Surety Co.
(1944, CA3 Pa) 141 F2d 230.
86. Legality; public policy
Decisions of state court as to whether contract was contrary to public policy was not
binding on federal courts. Delmas v Insurance Co. (1872) 81 US 661, 14 Wall 661,
20 L Ed 757.
Construction of state statute or constitutional provision by state court was binding on
federal court, but determination of whether certain contract violated statute as so
construed was matter which federal court could determine for itself irrespective of
state court decisions. Casserleigh v Wood (1902, CA8 Colo) 119 F 308; Ottumwa v
City Water Supply Co. (1902, CA8 Iowa) 119 F 315.
In determining whether contract was against public policy, national courts exercised
concurrent jurisdiction with state courts, but gave decisions of latter courts weight of
persuasive authority. Fidelity & Deposit Co. v Grand Nat'l Bank (1934, CA8 Mo) 69
F2d 177.
87. Right of action
Contractor, having right of action at law against surety under state procedure, had
same remedy in federal court, notwithstanding equity might also have had
jurisdiction on bill for accounting. United States Fidelity & Guaranty Co. v
Worthington & Co. (1925, CA5 Ala) 6 F2d 502, cert den (1925) 269 US 583, 70 L
Ed 424, 46 S Ct 119.
In suit brought by helicopter leasing company for breach of helicopter lease
agreement against medical evacuation company and guarantors of lease agreement,
bar created by state's qualification statute comprises substantive law which must be
applied in diversity cases in federal court; state's qualification statute does not bar
helicopter leasing company from maintaining action for breach of lease agreements.
61
Aim Leasing Corp. v Helicopter Medical Evacuation, Inc. (1982, CA11 Ala) 687
F2d 354, reh den (1982, CA11 Ala) 696 F2d 1007.
State statute providing who could sue on contracts under seal was held to govern
federal court in action on contract arising in such state. R. E. Duvall Co. v
Washington, B. & A. E. R. Co. (1936, DC Md) 15 F Supp 536.
88. Seals
State statute abolishing distinction between contracts under seal and those not under
seal controlled in the federal court. Pittsburgh Terminal Coal Corp. v Williams
(1934, CA3 Pa) 70 F2d 65, reh den (1934, CA3 Pa) 73 F2d 387 and cert den (1934)
293 US 617, 79 L Ed 705, 55 S Ct 149.
Illinois statute drawing distinction between contracts under seal and those not under
seal was controlling in federal court. Bausch & Lomb Optical Co. v Wahlgren (1932,
DC Ill) 1 F Supp 799, affd (1934, CA7 Ill) 68 F2d 660, cert den (1934) 292 US 639,
78 L Ed 1491, 54 S Ct 774, reh den (1934) 292 US 615, 78 L Ed 1474, 54 S Ct 862.
State statute providing who could sue on contracts under seal governed federal court
in action on contract arising in such state. R. E. Duvall Co. v Washington, B. & A.
E. R. Co. (1936, DC Md) 15 F Supp 536.
89. State of execution or performance
Construction, validity, and effect of private contracts were governed by law of place
where they were made and were to be performed, if that was same. Brine v Insurance
Co. (1878) 96 US 627, 6 Otto 627, 24 L Ed 858.
Laws of state where contract was made and was to be performed were to be followed
by federal court in construing contract. Early & Daniel Co. v American Surety Co.
(1925, CA4 NC) 5 F2d 670.
Particularly in cases involving interpretation of contracts are federal equity courts
disposed to adopt construction placed upon similar contracts by legislatures and
courts of states where the contracts were executed. Douglass v Thurston County
(1936, CA9 Wash) 86 F2d 899.
Law of place where contract was made governed its nature, validity, and
interpretation unless it appeared that parties, when entering into contract, intended to
be bound by law of some other place. Consolidated Flour Mills Co. v File Bros.
Wholesale Co. (1940, CA10 Okla) 110 F2d 926.
Federal courts, in dealing with Kentucky contracts, followed decisions of Kentucky
court of appeals unless conflicting with decisions of federal courts. Carter v Business
Men's Assurance Co. (1937, DC Ky) 19 F Supp 599.
62
90. Statute of frauds
Statute of frauds, even as applied to commercial instruments, was such law of state
as was binding on federal court. Moses v Lawrence County Bank (1893) 149 US
298, 37 L Ed 743, 13 S Ct 900.
Construction of state statute of frauds by highest court of the state was binding on
federal courts. York v Washburn (1904, CA8 Minn) 129 F 564; Swiss Oil Corp. v
Eastern Gulf Oil Co. (1924, CA6 Ky) 297 F 28; Midland Steel Sales Co. v Waterloo
Gasoline Engine Co. (1925, CA8 Iowa) 9 F2d 250; Parrish v Haynes (1932, CA5
Tex) 62 F2d 105; United States v Mitchell (1934, CA7 Ill) 74 F2d 571, 4 USTC P
1368, 14 AFTR 878; Danciger Oil & Refining Co. v Burroughs (1935, CA10 Okla)
75 F2d 855, cert den (1935) 295 US 758, 79 L Ed 1700, 55 S Ct 915.
State statute of frauds was controlling in action for specific performance brought in
federal court. Brooks v Yarbrough (1930, CA10 Okla) 37 F2d 527.
If the state statute of frauds was procedural and remedial, it was controlling in the
federal court. Levi v Murrell (1933, CA9 Cal) 63 F2d 670, cert den (1933) 290 US
638, 78 L Ed 554, 54 S Ct 55.
In action seeking specific performance of oral contract for sale of real and personal
property, district court properly applied state Statute of Frauds in dismissing suit,
notwithstanding non-diversity posture of case. Watson v McCabe (1975, CA6 Tenn)
527 F2d 286.
2.Particular Contracts or Provisions
91. Arbitration
Agreement that all differences arising under contract would be submitted to
arbitration related to law of remedies, and law that governed remedies was law of
forum. Gatliff Coal Co. v Cox (1944, CA6 Ky) 142 F2d 876, 14 BNA LRRM 782, 8
CCH LC P 62199.
92. Assignments
State court's decision that assignments were valid was binding on federal courts.
Blair v Commissioner (1937) 300 US 5, 81 L Ed 465, 57 S Ct 330, 37-1 USTC P
9083, 18 AFTR 1132.
Court followed state decisions in holding income under a trust was nonassignable.
King v United States (1936, CA1 Mass) 84 F2d 156, 36-2 USTC P 9308, 17 AFTR
1262.
93. Employment
63
State court's construction of state act relating to tenure of teachers holding such act
did not amount to legislative contract with teachers and did not become term of
contracts entered into with employees by boards of education would be accepted by
United States Supreme Court unless palpably erroneous. Phelps v Board of
Education (1937) 300 US 319, 81 L Ed 674, 57 S Ct 483.
Contract of employment of attorney to recover back federal floor and processing
taxes entered into in Illinois was Illinois contract, and liability thereunder was
determined by Illinois law and Illinois statute of limitations. Roe v Sears, Roebuck
& Co. (1943, CA7 Ill) 132 F2d 829.
Where state court held that contract of employment was no longer binding on
employer after employee accepted employment from company which purchased all
stock of original employer, such decision was res adjudicata in suit in federal court
against latter company. Beall v Baltimore & O. R. Co. (1939, DC W Va) 26 F Supp
233.
Where automobile dealer had oral contracts with buyers who purchased cars and
then traded or sold them, whether buyers were partners or employees of dealer
within Social Security Act was governed by state law. Yearwood v United States
(1944, WD La) 55 F Supp 295, 32 AFTR 834.
In civil diversity action by corporation against former employee and latter's present
employer for breach of covenant not to compete, brought in Federal District Court in
Tennessee, Tennessee law is applicable, pursuant to 28 USCS § 1652. Delta Corp. of
America v Sebrite Corp. (1974, ED Tenn) 391 F Supp 638.
94. Government
Construction of statutes regulating making of public contracts was binding on
federal courts. Hancock v Louisville & N. R. Co. (1892) 145 US 409, 36 L Ed 755,
12 S Ct 969; Capital Bank v School Dist. No. 26 (1894, CA8 ND) 63 F 938, cert den
(1897) 165 US 720, 41 L Ed 1184, 17 S Ct 992; United States Wood Preserving Co.
v Sundmaker (1911, CA6 Ohio) 186 F 678, 9 Ohiolr 390.
Rights and liabilities under contracts with Federal Government are controlled by
federal common law rather than by state law. United States v County of Allegheny
(1944) 322 US 174, 88 L Ed 1209, 64 S Ct 908 (ovrld as stated in United States v
County of Fresno (1977) 429 US 452, 50 L Ed 2d 683, 97 S Ct 699) and (ovrld as
stated in United States v. S. Fla. Water Mgmt. Dist. (1992, SD Fla) 847 F Supp
1567); S. R. A., Inc. v Minnesota (1946) 327 US 558, 90 L Ed 851, 66 S Ct 749;
United States v Seckinger (1970) 397 US 203, 25 L Ed 2d 224, 90 S Ct 880, reh den
(1970) 397 US 1031, 25 L Ed 2d 546, 90 S Ct 1255.
64
In consideration of power of county courts with reference to granting of bridge
franchise, federal court was bound by construction of state statutes by state supreme
court. Arkansas State Highway Com. v Butler (1939, CA8 Ark) 105 F2d 732.
Excavation contractor excavating post office site at contract price per cubic yard was
entitled to recover on basis of 27 cubic feet constituting cubic yard, and not on basis
of 13 1/2 cubic feet per cubic yard provided for by state statute, as state statute was
inconsistent with national common law under which cubic yard was 27 cubic feet.
Hill v Ring Const. Co. (1937, DC Mo) 19 F Supp 434.
When right to sue government on contract was confined to its own courts, there was
right arising under laws of United States as to which state rules were inapplicable,
and when government entered into contract with private citizen its rights and
obligations were governed by same general principles of law applicable to like
contracts between individuals, but application of state or federal principles of law to
interpretation of such contracts was dependent upon source of rights to be interpreted
and courts in which enforcement was sought. Byron Jackson Co. v United States
(1940, DC Cal) 35 F Supp 665.
95. Guaranty, indemnity and surety
Though federal court was not controlled by state decisions on question of
commercial law, state decisions determining rights of parties to contract of
suretyship were followed. Community Bldg. Co. v Maryland Casualty Co. (1925,
CA9 Wash) 8 F2d 678, cert den (1926) 270 US 652, 70 L Ed 782, 46 S Ct 351.
State statute limiting effect of warranties or conditions in contract of indemnity
insurance was controlling in a federal court. American Surety Co. v Bankers' Sav. &
Loan Asso. (1933, CA8 Neb) 67 F2d 803, cert den (1934) 291 US 678, 78 L Ed
1066, 54 S Ct 529.
Suretyship contract made and to be performed in certain state was construed by
federal court according to decisions of state's courts in such cases. Union Indem. Co.
v Lang (1934, CA9 Cal) 71 F2d 901.
Indemnity bond given to bank to protect it against dishonest or criminal act of
employee, required by state statute, was construed as state's courts construed it.
American Nat'l Bank & Trust Co. v United States Fidelity & Guaranty Co. (1934,
DC Ala) 7 F Supp 578.
96. Sales
Contract of sale of goods was governed by law of state where contract was made.
Cudahy Packing Co. v Narzisenfeld (1924, CA2 NY) 3 F2d 567.
65
Law as to conditional sales of state in which sale was made governed adjudication in
federal court. Keeler v Goodman (1924, CA5 Miss) 296 F 909.
Validity of conditional sale contract was determined by the decisions of state court.
Smith v Bucyrus Co. (1929, CA5 Ala) 31 F2d 514.
State court's construction of local conditional sales statute controlled federal court if
transaction before it were sale. Air Equipment Corp. v Rubbercraft Corp. (1935,
CA2 Conn) 79 F2d 521.
Though question whether Michigan contract was conditional sale or chattel
mortgage was one of general law decisions of Michigan supreme court were
followed in federal court. Cooper v Michigan Artificial Ice Products Co. (1930, DC
Mich) 1 F Supp 741, affd (1932, CA6 Mich) 61 F2d 1046, cert den (1933) 288 US
608, 77 L Ed 983, 53 S Ct 400.
Federal district court for district of Pennsylvania followed decisions of state courts
construing bailment leases and conditional sales contracts. In re Stein (1936, DC Pa)
17 F Supp 587.
97.--Land
Decision concerning vendor's right to lien for unpaid purchase money was followed.
Consolidated Arizona Smelting Co. v Hinchman (1914, CA1 Me) 212 F 813, cert
den (1915) 239 US 640, 60 L Ed 482, 36 S Ct 161.
Construction and effect of contract for sale of land and determination of title of
vendor were controlled by laws of state where land was located. Pennsylvania Co. ,
etc. v Philadelphia Inquirer Co. (1928, CA3 Pa) 25 F2d 701; Freedman v
Massachusetts Mut. Life Ins. Co. (1936, CA6 Mich) 81 F2d 698; Plimpton v
Mattakeunk Cabin Colony, Inc. (1934, DC Conn) 9 F Supp 288.
Federal court in Louisiana, on question of enforceability of contract concerning
Texas land, applied law of Louisiana, just as court of that state would do. Hamilton v
Glassell (1932, CA5 La) 57 F2d 1032.
Where pre-existing debt of vendor had been assumed as part of purchase price,
whether creditor was entitled to enforce vendor's lien was governed by local law.
Citizens' State Bank v Clark (1935, CA5 Tex) 75 F2d 791.
Action brought for payment on promissory note although brought in District Court in
Pennsylvania would be decided under law of South Carolina where obligations in
question were South Carolina contracts and properties to which they referred were
located in South Carolina, District Court looking to laws of South Carolina in respect
to debt whose payment was secured by promissory note and mortgage. Price v
66
Levers (1979, WD Pa) 475 F Supp 937, affd without op (1980, CA3 Pa) 620 F2d
289.
98.--Securities
Rights and obligations of parties resulting from transactions under guaranteed
mortgage certificates issued by local corporation as determined by state's highest
court had to be treated as authoritative by federal courts. Prudential Ins. Co. v
Liberdar Holding Corp. (1934, CA2 NY) 72 F2d 395.
Where decision of court of appeals that securities issued without consent of
corporate commissioner were void and could not be enforced against issuer was
inconsistent with later decision of state's highest court construing corporate securities
act, court of appeals would follow state court's decision. Laugharn v Bank of
America Nat'l Trust & Sav. Ass'n (1937, CA9 Cal) 88 F2d 551, cert den (1937) 301
US 699, 81 L Ed 1354, 57 S Ct 929.
D.Domestic Relations
99. Generally
State statutory modification of common law in regard to rights of husband and wife
as plaintiffs was applicable in federal courts. Morning Journal Asso. v Smith (1892,
CA2 NY) 56 F 141.
100. Actions by or against husband and wife
State statute providing that married woman "may maintain an action in her own
name for any injury to her person" was applicable to suits brought in the federal, as
well as the state, courts. Texas & P. R. Co. v Humble (1899, CA8 Ark) 97 F 837,
affd (1901) 181 US 57, 45 L Ed 747, 21 S Ct 526.
In suit to recover for accidental injuries to wife, federal court in awarding damages
was bound by interpretation and effect of state's married women's enabling act as
construed and applied by state courts in relation to the rights of both husband and
wife. Gaillard v Boynton (1934, CA1 NH) 70 F2d 552.
In action under state employers' liability act, admission of testimony of deceased
employee as to his marital relationship with plaintiff was not substantive to extent of
requiring federal district court to follow state law. Franzen v E. I. Du Pont De
Nemours & Co. (1943, DC NJ) 51 F Supp 578, affd (1944, CA3 NJ) 146 F2d 837.
101. Divorce and incidents thereof
Refusal of state supreme court to give credit to judgment of sister state for alimony
because subject to modification was ruling upon federal right, and sufficiency of
grounds for denial was for United States Supreme Court to decide; while United
States Supreme Court gave deference to opinion of court of forum in determining
67
applicable law of state which rendered judgment sought to be enforced, view of such
latter court was not conclusive. Barber v Barber (1944) 323 US 77, 89 L Ed 82, 65 S
Ct 137, 157 ALR 163.
Marriage status after divorce was peculiarly one of statutory regulation, and
construction of statute by highest court of state was binding on the federal court.
Wheelock v Freiwald (1933, CA8 Mo) 66 F2d 694.
Decisions concerning right of parents to custody of children were binding in federal
court. In re Barry (1844, CCD NY) 1 Brunner Col Cas 533, 42 F 113.
102. Illegitimate children
State decision construing state legitimation statute was followed. Louie Wah You v
Nagle (1928, CA9 Cal) 27 F2d 573; Pfeifer v Wright (1930, CA10 Okla) 41 F2d
464, 73 ALR 932, cert den (1931) 282 US 896, 75 L Ed 789, 51 S Ct 181.
Construction by state courts of state statute as to inheritable interest of mother of
illegitimate child was controlling in federal court. O'Quain v United States (1929,
CA5 La) 31 F2d 756.
103. Marriage
Decision of state supreme court holding common-law marriages invalid was binding
upon federal court. Bolin v Marshall (1935, CA9 Or) 76 F2d 668, cert den (1935)
296 US 573, 80 L Ed 404, 56 S Ct 116.
Marriage of Louisiana man by proxy in Turkey was valid under Louisiana statutes,
though point had not been decided by supreme court of Louisiana, and Louisiana law
controlled decision of federal court. United States ex rel. Modianos v Tuttle (1925,
DC La) 12 F2d 927.
In action for breach of marriage promise brought in federal district court, decisions
of courts of state in which district of suit was situated that exemplary damages were
not allowable in such suits would be followed. Adams v Griffith (1943, DC Mo) 51
F Supp 549.
104. Property rights
Decisions as to nature of estate by entirety was rule of property binding on federal
courts in construing federal estate tax statute. Tyler v United States (1930) 281 US
497, 74 L Ed 991, 50 S Ct 356, 2 USTC P 532, 8 AFTR 10912, 69 ALR 758
(superseded by statute as stated in Legg's Estate v Commissioner (1940, CA4) 114
F2d 760, 40-2 USTC P 9683, 25 AFTR 717).
68
Decision of state court as to nature of wife's interest in community property was
controlling in federal court. Talcott v United States (1928, CA9 Cal) 23 F2d 897, 1
USTC P 279, 6 AFTR 7232, cert den (1928) 277 US 604, 72 L Ed 1011, 48 S Ct
601; Gillis v Welch (1935, CA9 Cal) 80 F2d 165, 35-2 USTC P 9636, 16 AFTR
1388, cert den (1936) 297 US 722, 80 L Ed 1006, 56 S Ct 668.
Interest of wife and husband in property was determined by state statutes and
decisions, but taxability under federal estate law was determined by federal
decisions. Allen v Henggeler (1929, CA8 Neb) 32 F2d 69, 7 AFTR 8680, cert den
(1929) 280 US 594, 74 L Ed 642, 50 S Ct 40.
State court decisions construing statute relating to conveyances to husband and wife
was binding on federal court. In re Brown (1932, DC Ky) 60 F2d 269.
In estate tax cases court was entitled to turn to state law in determining what was
community and what was separate property. True v United States (1943, ED Wash)
51 F Supp 720, 43-2 USTC P 10064, 31 AFTR 701.
E.Insolvency
1.In General
105. Assignment for benefit of creditors
Construction, by highest state court, of statute concerning assignments for benefits
of creditors was binding in courts of United States. May v Tenney (1893) 148 US
60, 37 L Ed 368, 13 S Ct 491.
106. Creditors' suits
Federal equitable principles rather than state laws control on question whether
creditor's conduct requires subordination of his claim to claims of other creditors in
bankruptcy proceeding. Prudence Realization Corp. v Geist (1942) 316 US 89, 86 L
Ed 1293, 62 S Ct 978; American Surety Co. v Sampsell (1946) 327 US 269, 90 L Ed
663, 66 S Ct 571; Heiser v Woodruff (1946) 327 US 726, 90 L Ed 970, 66 S Ct 853,
reh den (1946) 328 US 879, 90 L Ed 1647, 66 S Ct 1335.
In creditor's suit in federal court where jurisdiction depended upon diversity of
citizenship, claims were allowable according to law of forum and assets distributable
as that law required. Prudential Ins. Co. v Land Estates, Inc. (1940, CA2 NY) 110
F2d 617.
107. Reorganization proceedings
Illinois cases relating to applicability of so-called six months' equity receivership
rule extending preference to claims of labor and supply creditors did not control in
railroad reorganization cases brought in Illinois federal courts. In re Chicago & N.
W. R. Co. (1940, CA7 Ill) 110 F2d 425.
69
Rule concerning reference to state court of every land question arising in bankruptcy
could not be invoked in every case involving title to real estate in bankruptcy
reorganization proceeding, but if record showed that reorganization proceedings
would be hindered, burdened, or delayed by proceeding in state court rule had no
application. In re Fine Arts Corp. (1943, CA6 Mich) 136 F2d 28.
Even though setting up of intercorporate relations among debtor and its underlying
companies was matter in accomplishment of which they properly followed state law,
it was question for judicial application of bankruptcy law to determine what effect
such intercorporate relations had in bankruptcy reorganization court. In re Pittsburgh
Rys. (1946, CA3 Pa) 155 F2d 477, cert den (1946) 329 US 731, 91 L Ed 632, 67 S
Ct 89.
108. Receivers and receiverships
Jurisdiction of federal court of action for appointment of receiver for foreign
corporation was determined by laws of state. Burnrite Coal Briquette Co. v Riggs
(1923, CA3 NJ) 291 F 754.
Federal court having custody of street railway system for which it had appointed
receiver would determine for itself whether there was contract to operate road, and
terms of contract for purpose of ascertaining whether such operation amounted to
confiscation in violation of 14th Amendment of the Constitution of the United
States. Crawford v Duluth S. R. Co. (1932, CA7 Wis) 60 F2d 212.
Federal courts followed rule of courts of state in which land was situated in
determining whether lessor had right of action immediately upon repudiation of his
lease by lessee's receiver. Moore v McDuffie (1934, CA9 Cal) 71 F2d 729.
Whether appointment of receivers for lessee constituted anticipatory breach of lease
giving landlord claim for difference between rent reserved and rental value of
premises was questioned was governed by state law. Spillinger v C. O. Miller Co.
(1935, CA2 NY) 80 F2d 88.
Decision determining power of state courts to appoint receivers was binding on
federal court. McKinney v Kansas Nautral Gas Co. (1913, DC Kan) 206 F 772, affd
(1913, CA8 Kan) 209 F 300.
State decision on statutory powers of receiver for insurance company was binding on
federal court. Hopkins v Lancaster (1918, DC Ala) 254 F 190.
Liability of receiver for anticipatory breach of lease was governed by local law. Leo
v Pearce Stores Co. (1931, DC Mich) 54 F2d 92.
70
In matter of appointment of receiver for building and loan association, laws and
decisions of state were looked to for authority. Paul v Craemer (1938, DC Cal) 24 F
Supp 353.
2.Bankruptcy
109. Generally
Questions as to extent and nature of bankrupt's property rights are generally
determinable in bankruptcy proceedings by state law rather than federal common
law. Thompson v Magnolia Petroleum Co. (1940) 309 US 478, 84 L Ed 876, 60 S Ct
628; Jaffke v Dunham (1957) 352 US 280, 1 L Ed 2d 314, 77 S Ct 307;
Commissioner v Stern (1958) 357 US 39, 2 L Ed 2d 1126, 78 S Ct 1047, 58-2 USTC
P 9594, 1 AFTR 2d 1899.
Federal common law as to res judicata, rather than law of forum state, applies in
bankruptcy proceedings. Heiser v Woodruff (1946) 327 US 726, 90 L Ed 970, 66 S
Ct 853, reh den (1946) 328 US 879, 90 L Ed 1647, 66 S Ct 1335.
In determining liability of bank for deposit of bankruptcy funds made in violation of
terms of Bankruptcy Act, federal courts were not bound by decisions of local courts,
for question was one of federal rather than local law. American Surety Co. v First
Nat'l Bank (1944, CA4 W Va) 141 F2d 411, cert den (1944) 322 US 754, 88 L Ed
1583, 64 S Ct 1267.
Predecessor of 28 USCS § 1652 did not apply to hearing before referee in
bankruptcy. In re De Gottardi (1902, DC Cal) 114 F 328.
Rules in bankruptcy were determined by federal court decisions. In re J. C. Sparks
Co. (1929, DC SC) 46 F2d 497.
In case of conflict or inconsistency between bankruptcy laws and state statutes,
courts followed federal statutes. In re Rochester Pad & Wrapper Co. (1937, DC NY)
20 F Supp 295.
Rule of Erie R. Co. v Tompkins was not applicable to consideration of facts in
bankruptcy proceeding. In re Zaepfel & Russell, Inc. (1941, DC Ky) 49 F Supp 709,
affd (1943, CA6 Ky) 135 F2d 215.
Contention that federal law does not govern procedural issues in Bankruptcy Courts
on ground that such courts are not subject to Rules of Decision Act since they are not
Article III courts is rejected as absurd. Peachtree Lane Assocs. v Granader (In re
Peachtree Lane Assocs.) (1995, BC ND Ill) 186 BR 663, 27 BCD 1100, app dismd,
remanded (1995, ND Ill) 188 BR 815.
110. Petition
71
State law requiring corporation to obtain vote of stockholders authorizing voluntary
petition in bankruptcy was without effect in bankruptcy proceeding in federal court.
In re American Bond & Mortg. Co. (1932, CA7 Ill) 61 F2d 875, affd (1933) 289 US
165, 77 L Ed 1100, 53 S Ct 551.
111. Bankrupt estate
Where rights to property in controversy were based on contracts made in Wisconsin,
and those rights were claimed to have matured prior to adjudication in bankruptcy,
law of Wisconsin had to be applied in determining those rights at and prior to
adjudication in bankruptcy, for adjudication adds nothing to rights. In re
Baumgartner (1931, CA7 Wis) 55 F2d 1041.
112. Trustees
New York statute prohibiting suit against trustee was not applicable to trustee in
bankruptcy. Vass v Conron Bros. Co. (1932, CA2 NY) 59 F2d 969.
Status of trustee under 11 USCS § 110(c) was governed by Bankruptcy Act and
presented federal question, but extent of rights conferred by that act on trustee was
controlled by substantive law of jurisdiction governing property in question. Robbins
v Bostian (1943, CA8 Mo) 135 F2d 298, different results reached on reh on other
grounds (1943, CA8 Mo) 138 F2d 622.
113. Provable debts and claims
What claims of creditors were valid and subsisting obligations against bankrupt at
time petition in bankruptcy was filed was question which in absence of overruling
federal law was to be determined by reference to state law. Vanston Bondholders
Protective Committee v Green (1946) 329 US 156, 91 L Ed 162, 67 S Ct 237, reh
den (1947) 329 US 833, 91 L Ed 706, 67 S Ct 497 and reh den (1947) 329 US 833,
91 L Ed 706, 67 S Ct 498 and reh den (1947) 329 US 833, 91 L Ed 706, 67 S Ct 499
and (superseded by statute as stated in In re Lapiana (1989, ND Ill) 100 BR 998) and
(superseded by statute as stated in In re Sublett (1990, CA11 Ala) 895 F2d 1381, 22
CBC2d 868, CCH Bankr L Rptr P 73279) and (superseded by statute as stated in In
re Auto Specialties Mfg. Co. (1990, WD Mich) 1990 US Dist LEXIS 8460) and
(criticized in Official Unsecured Creditors Comm. v Microdot (In re Valley-Vulcan
Mold) (1994, BC ND Ohio) 1994 Bankr LEXIS 2347) and (superseded by statute as
stated in In re Marfin Ready Mix Corp. (1998, BC ED NY) 220 BR 148, 40 CBC2d
199) and (superseded by statute as stated in Florida Asset Fin. Corp. v Dixon (In re
Dixon) (1998, WD Va) 228 BR 166, 11 Fourth Cir & Dist Col Bankr Ct Rep 71).
Validity and provability of claims depended upon principles of general commercial
law and not on decisions of state court. Harris Irby & Vose v Allied Compress Co.
(1925, CA5 Ga) 6 F2d 7.
72
In determining whether claim filed against bankrupt estate was outlawed, pertinent
statute of limitations was that of state where district court in which bankruptcy
proceedings were pending sat. In re Povill (1939, CA2 NY) 105 F2d 157.
Upon reclamation petition seeking return of goods sold and delivered to bankrupt,
under conditional sales contract, court of appeals followed decision of highest court
of state in which transaction took place construing statute of that state as to validity
of conditional sales. In re Curb Service Laundry & Dry Cleaning, Inc. (1944, CA2
Conn) 145 F2d 756.
Whether bankrupts served with trustee process were charged with interest on
checking account paid to depositor after service of writ was determined, if possible,
by laws of state. United States Shipping Bd. Emergency Fleet Corp. v Atlantic Corp.
(1925, DC Mass) 5 F2d 529.
Bankruptcy Act did not provide for imputation of payments where there was
plurality of debts of unequal rank, and state practice governed. In re William P.
Copping Sheet Plate & Iron Works, Inc. (1926, DC La) 13 F2d 895.
114. Liens and priorities
Property rights did not gain any inviolability in bankruptcy court because created
and protected by state law, but if Congress was acting within its bankruptcy power it
could authorize bankruptcy court to affect these property rights, provided limitations
of due process clause were observed. Wright v Union Cent. Life Ins. Co. (1938) 304
US 502, 82 L Ed 1490, 58 S Ct 1025, reh den (1938) 305 US 668, 83 L Ed 433, 59 S
Ct 56.
State decision that mechanic's lien, though filed after bankruptcy adjudication, had
priority was followed by federal court. New York-Brooklyn Fuel Corp. v Fuller
(1926, CA2 NY) 11 F2d 802.
Bankruptcy court could follow rulings of state court in deciding right to preferred
claim. Nelson v Guaranty Trust Co. (1932, CA9 Wash) 60 F2d 463.
Laws of state where adjudication in bankruptcy was had were controlling as to
validity of liens. In re Knox-Powell-Stockton Co. (1939, CA9 Cal) 100 F2d 979, 391 USTC P 9277, 22 AFTR 372.
Where claims of proceeds of sale of property upon premises of bankrupt in
Pennsylvania were claimed by trustee in bankruptcy and by successor assignee of
industrial mortgage, respective rights depend upon Pennsylvania law. In re Taylor &
Dean Mfg. Co. (1943, CA3 Pa) 136 F2d 370.
Rights of lienholders were governed by state laws and were protected by Fifth
Amendment, but such rights were subject to operation of former 11 USCS § 203(s)
73
(farmer-debtor proceedings in bankruptcy) to effect rehabilitation of lien debtor.
Reichert v Federal Land Bank (1944, CA8 ND) 139 F2d 627, cert den (1944) 322
US 729, 88 L Ed 1564, 64 S Ct 947.
State court's determination that lien survived bankruptcy was not binding on
bankruptcy court. In re Unit Oil Co. (1943, DC Minn) 50 F Supp 264.
115. Voidable transfers
What constituted transfer and when it was complete within meaning of former 11
USCS § 96(a) was necessarily federal question, since it arose under federal statute
intended to have uniform application throughout United States. McKenzie v Irving
Trust Co. (1945) 323 US 365, 89 L Ed 305, 65 S Ct 405.
Effectiveness of transfer or assignment as against trustee in bankruptcy was tested by
standards of applicable state law. Adelman v Centaur Corp. (1944, CA6 Ohio) 145
F2d 573.
116. Adjudication and discharge
Court refused to follow state court decisions on effect of bankruptcy on assignment
of future wages. Local Loan Co. v Hunt (1934) 292 US 234, 78 L Ed 1230, 54 S Ct
695, 93 ALR 195 (superseded by statute as stated in In re Nadler (1990, BC DC
Mass) 122 BR 162, 21 BCD 251, 24 CBC2d 1287, CCH Bankr L Rptr P 73982).
Local rules concerning effect of adjudication and discharge in bankruptcy could not
be accepted as controlling federal court if they were subversive of purpose and
policy of Bankruptcy Act. Local Loan Co. v Hunt (1934) 292 US 234, 78 L Ed 1230,
54 S Ct 695, 93 ALR 195 (superseded by statute as stated in In re Nadler (1990, BC
DC Mass) 122 BR 162, 21 BCD 251, 24 CBC2d 1287, CCH Bankr L Rptr P 73982).
Once District Court in case sub judice determines that defendant's obligation to
plaintiff is not dischargeable, court may prevent relitigation of issue in Bankruptcy
Court. Erspan v Badgett (1981, CA5 Tex) 647 F2d 550, 24 CBC 451, CCH Bankr L
Rptr P 68050, reh den (1981, CA5 Tex) 659 F2d 26 and cert den (1982) 455 US 945,
71 L Ed 2d 658, 102 S Ct 1443.
F.Insurance
117. Law governing, generally
In construing policy of life insurance federal court would regard as significant
particular wording of act of state where insurer was incorporated and to laws of
which it was directly subject and its policies had to conform. Equitable Life
Assurance Soc. v Deem (1937, CA4 W Va) 91 F2d 569, cert den (1937) 302 US
744, 82 L Ed 575, 58 S Ct 146; Penn Mut. Life Ins. Co. v Forcier (1939, CA8 Mo)
103 F2d 166, cert den (1939) 308 US 571, 84 L Ed 479, 60 S Ct 86.
74
In action to recover on contract of flight insurance issued at Missouri airport to
Kansas resident, federal district court in Kansas should apply law of Kansas, not of
Missouri. Mutual of Omaha Ins. Co. v Russell (1968, CA10 Kan) 402 F2d 339, 29
ALR3d 753, cert den (1969) 394 US 973, 22 L Ed 2d 753, 89 S Ct 1456.
On motion to dismiss suit to dismiss double indemnity provision and disability
benefit provisions of life policies, laws of state where policies were delivered were
applicable laws. New York Life Ins. Co. v Ruhlin (1938, DC Pa) 25 F Supp 65, affd
on other grounds (1939, CA3 Pa) 106 F2d 921, cert den (1940) 309 US 655, 84 L Ed
1005, 60 S Ct 469, reh den (1940) 309 US 695, 84 L Ed 1035, 60 S Ct 588; Denton v
Travelers Ins. Co. (1938, DC Md) 25 F Supp 556.
118.--Contract provisions
Where insurance policy bore endorsement which provided that contract would be
deemed to be made and payable in state of Colorado, law of that state was
determinative as to whether certain parts constituted reinstatement of policy after
default. Bowie v Bankers Life Co. (1939, CA10 Colo) 105 F2d 806.
In construing policy of marine hull insurance, federal maritime law is applicable;
however, in absence of federal statutes or judicially established federal admiralty
law, District Court should look to appropriate state law for guidance. E.T.P.M.U.S.A., Inc. v Natural Gas Pipeline Co. (1984, ED La) 591 F Supp 971, affd without
op (1985, CA5 La) 765 F2d 1119.
Interpretation of notice of loss provisions of maritime insurance contracts are
governed by state rather than federal law. Big Lift Shipping Co., (N.A.), Inc. v
Bellefonte Ins. Co. (1984, SD NY) 594 F Supp 701, 1985 AMC 1201.
119.--State in which contract is made
Insurance contracts were governed by law of the place where written. Heine v New
York Life Ins. Co. (1931, CA9 Or) 50 F2d 382; Aetna Life Ins. Co. v Geher (1931,
CA9 Cal) 50 F2d 657; Bowen v Cote (1934, CA1 NH) 69 F2d 136; Prudential Ins.
Co. v Winn (1934, CA9 Wash) 71 F2d 126.
Where fire insurance policies in suit were North Dakota contracted, law of that state,
as interpreted by its courts, was binding upon federal court. Hartford Fire Ins. Co. v
Logan Grain Co. (1939, CA8 ND) 105 F2d 699.
For purpose of determining applicability of rule that contract was governed by law
of state where made, insurance contract was regarded as made in state in which
policy was delivered to insured and first premium paid by him, which delivery and
payment were, under the contract, the last acts legally necessary to bring the contract
into force. Ruhlin v New York Life Ins. Co. (1939, CA3 Pa) 106 F2d 921, cert den
75
(1940) 309 US 655, 84 L Ed 1005, 60 S Ct 469, reh den (1940) 309 US 695, 84 L Ed
1035, 60 S Ct 588.
In action in federal district court for judgment declaring insurer's rights and liabilities
under automobile liability policy executed in Michigan, law as announced by that
state was controlling where applicable. Sutton v Hawkeye Casualty Co. (1943, CA6
Tenn) 138 F2d 781.
120.--State in which property is located or loss occurs
Fire policies sued on in court of appeals were construed under law of the state where
loss occurred. Hyland v Millers Nat'l Ins. Co. (1937, CA9 Cal) 91 F2d 735, reh den
(1937, CA9 Cal) 92 F2d 462 and cert den.
Insurance policy was construed in federal court according to laws of state where
insured property was located. Turk v Newark Fire Ins. Co. (1925, DC Pa) 4 F2d 142,
affd (1925, CA3 Pa) 6 F2d 533, 43 ALR 496.
121. Effect of state statutes, generally
State statute declaring effect of failure of insurance company to deliver to insured
copy of his application was rule of substantive law controlling in federal courts.
Great Southern Life Ins. Co. v Burwell (1926, CA5 Miss) 12 F2d 244, cert den
(1926) 271 US 683, 70 L Ed 1150, 46 S Ct 633.
State court's construction of insurance statute was binding on federal courts. Union
Indem. Co. v Dodd (1927, CA4 Va) 21 F2d 709, 55 ALR 735, later app (CA4 Va)
32 F2d 512, cert den 280 US 581, 74 L Ed 631, 50 S Ct 33.
New York decisions under local statute holding tender of unearned premium
necessary with notice to effect cancellation of insurance policy, and similar decisions
of intermediate Illinois courts, was not binding on federal court construing Illinois
policy identical with that provided by New York statute, in absence of decision by
highest court of Illinois. Damen & J. Bldg. Corp. v Mechanics' Ins. Co. (1936, CA7
Ill) 83 F2d 793, cert den (1936) 299 US 556, 81 L Ed 409, 57 S Ct 17.
State statute providing that where medical examiner had issued certificate of health
insurer would be estopped from asserting insured was not in condition of health
required by policy at time of its delivery, except in cases of fraud, whether remedial
or substantive, was enforceable in federal equity action brought by insured to cancel
life policy. Mutual Life Ins. Co. v Cunningham (1937, CA8 Iowa) 87 F2d 842.
In case involving interpretation of Virginia uninsured motorist statute, where
jurisdiction is based on diversity, federal Court of Appeals is bound by decisions of
Virginia's highest court. White v Nationwide Mut. Ins. Co. (1966, CA4 Va) 361 F2d
785.
76
122.--Regulation of insurance companies or agents
State insurance law providing valid limitations and safeguards, binding on
corporation and its members, was inferred by federal courts. Cook v Illinois Bankers'
Ass'n (1931, CA7 Ill) 46 F2d 782, cert den (1931) 284 US 627, 76 L Ed 534, 52 S Ct
12.
State supreme court's construction of statute, as to insurance agent's authority to
accept insured's note in payment of ordinary premium, was binding on federal court.
Braman v Mutual Life Ins. Co. (1934, CA8 Minn) 73 F2d 391.
Construction of state statute by state's highest court as to what constituted agent of
insurance company was binding on federal court. Kentucky Macaroni Co. v London
& Provincial Marine & General Ins. Co. (1936, CA6 Ky) 83 F2d 126, cert den
(1936) 299 US 579, 81 L Ed 427, 57 S Ct 43.
123.--Rights of insured parties or other claimants
State court decision construing statute concerning right of injured person to sue
automobile liability insurer was binding on federal court, and statute as so construed
was applied. Biller v Meyer (1929, CA7 Wis) 33 F2d 440, 66 ALR 436.
State statute providing that injured person could sue insurer on automobile liability
policy was applicable to suit in federal court. Martin v Zurich General Acci. &
Liability Ins. Co. (1936, DC RI) 16 F Supp 897.
124.--Statutes providing rules of construction
State court's construction of statute relative to effect of statements in applications for
insurance was binding on federal court. Jefferson Standard Life Ins. Co. v Clemmer
(1935, CA4 Va) 79 F2d 724, 103 ALR 171.
In life insurance action, federal court was required to follow state court's
construction of statute providing statements made by insured in application would in
absence of fraud be deemed representations and not warranties, and that question of
whether or not representations were fraudulent was for jury. Federal Life Ins. Co. v
Zebec (1936, CA7 Ind) 82 F2d 961, cert den (1936) 299 US 558, 81 L Ed 411, 57 S
Ct 20.
125. Construction
In federal courts, questions concerning proper construction of contracts of insurance
were governed, even in absence of state statute, by decisions of appropriate state
court, and this doctrine applied when question arose in action at law or equity.
Ruhlin v New York Life Ins. Co. (1938) 304 US 202, 82 L Ed 1290, 58 S Ct 860, 11
Ohio Ops 327.
77
Decisions of state supreme court controlled as to construction of contract of
insurance issued on life of resident of state and sued on in federal district court in
state. Century Ins. Co. v First Nat'l Bank (1939, CA5 Tex) 102 F2d 726, cert den
(1939) 308 US 570, 84 L Ed 478, 60 S Ct 84; Aetna Life Ins. Co. v Conway (1939,
CA10 Kan) 102 F2d 743; Pope v Lincoln Nat'l Ins. Co. (1939, CA8 Mo) 103 F2d
265; Shanks v Travelers' Ins. Co. (1938, DC Okla) 25 F Supp 740; Nalley v New
York Life Ins. Co. (1943, DC Ga) 48 F Supp 470, affd (1943, CA5 Ga) 138 F2d 318.
Answer to question whether signatures of checks were "forged," within meaning of
that term as used in policy of insurance, depended on state law. Fitzgibbons Boiler
Co. v Employers' Liability Assurance Corp. (1939, CA2 NY) 105 F2d 893.
Construction of incontestability clause of life insurance policy as to its applicability
to provisions for disability and double indemnity benefits had to accord with
applicable state decisions. Ruhlin v New York Life Ins. Co. (1939, CA3 Pa) 106 F2d
921, cert den (1940) 309 US 655, 84 L Ed 1005, 60 S Ct 469, reh den (1940) 309 US
695, 84 L Ed 1035, 60 S Ct 588.
Construction of cash surrender value provisions of insurance contract by state courts
was binding on federal court in bankruptcy proceedings, though there was not statute
in point. In re Pinals (1930, DC NJ) 38 F2d 117, affd (1930, CA3 NJ) 43 F2d 74.
Construction placed on statutory standard form of accident policy by state supreme
court was binding on federal court. Clay v Aetna Life Ins. Co. (1931, DC Minn) 53
F2d 689.
126.--Beneficiary
Where highest bidder at judicial sale of lands tendered bonds and took out fire
insurance, whether or not such bidder was equitable owner entitled to benefits of
insurance, although sale was not confirmed until after loss, was question relating to
realty title, and its determination by state decisions would bind federal court.
Fidelity-Phenix Fire Ins. Co. v Haywood (1934, CA6 Ky) 71 F2d 834.
127.--Coverage
Whether public policy prevented recovery for death by suicide was local question.
Northwestern Mut. Life Ins. Co. v Johnson (1920) 254 US 96, 65 L Ed 155, 41 S Ct
47.
Court of Appeals was bound by Texas decisions in construing Texas automobile
liability insurance policy, as to insurer's liability. Callaway v Central Surety & Ins.
Corp. (1939, CA5 Tex) 107 F2d 761.
78
In diversity case, determination of whether accident policy provision was contrary to
public policy is governed by applicable state law. Cornellier v American Casualty
Co. (1968, CA2 Vt) 389 F2d 641.
Although there were no Texas cases dealing with question of whether insurer, by
denying liability under uninsured motorist policy waived its rights under consent
clause, federal court was bound to apply Texas law and would attempt to predict
what Texas courts would hold if faced with such issue. Stephens v State Farm Mut.
Auto. Ins. Co. (1975, CA5 Tex) 508 F2d 1363.
128.--Insurable interest
State decisions that conditional purchaser of chattels was equitable owner and
entitled to take out insurance as "sole and unconditional owner" involved question of
title to property in state and were binding on federal courts. Sims v American Cent.
Ins. Co. (1924, CA6 Tenn) 296 F 115, cert den (1924) 265 US 595, 68 L Ed 1197,
44 S Ct 638.
129. Fraud in procurement
With respect to legal effect of false answer in application for policy of life insurance,
federal court looked to law relative thereto as declared by decisions of highest court
of state. New York Life Ins. Co. v McCurdy (1939, CA10 Kan) 106 F2d 181, cert
den (1940) 309 US 656, 84 L Ed 1005, 60 S Ct 470.
Substantive law of New Jersey governs diversity action involving claim for
rescission of insurance contract for fraud in procurement where contract was
delivered and performed in New Jersey. Fidelity & Deposit Co. v Hudson United
Bank (1980, DC NJ) 493 F Supp 434, revd on other grounds, remanded (1981, CA3
NJ) 653 F2d 766.
130. Government insurance
On war risk policy, question whether death or divorce, in absence of children,
terminated relationship by affinity was matter of local law. Steele v Suwalski (1935,
CA7 Wis) 75 F2d 885, 99 ALR 588.
Right to bring new suit on war risk insurance policy within one year after
termination of prior suit for reasons not affecting merits as provided by 33 USCS §
445 was not barred by state statute of limitations. Dumas v United States (1939,
CA10 Kan) 103 F2d 676.
Whether valid common law marriage existed between deceased veteran and
beneficiary named in war risk insurance policy depended upon law of state in which
marriage took place. Live Stock Nat'l Bank v United States (1939, CA7 Ill) 106 F2d
240.
79
In disputes arising under National Flood Insurance Act of 1968, federal law governs
award of attorneys' fees. Hanover Bldg. Materials, Inc. v Guiffrida (1984, CA5 Tex)
748 F2d 1011.
War risk insurance contract was construed with reference to federal statutes and
regulations promulgated thereunder. Sternfeld v United States (1929, DC NY) 32
F2d 789.
National Service Life Insurance policies are contracts with United States and their
terms are governed by federal statutes and regulations. Legatie v United States
(1966, DC NY) 40 FRD 114.
131. Payment of premiums
Question of liability for disability benefits to insured who became totally and
permanently disabled, during period of grace for payment of semiannual premium,
but which was not paid until after expiration of period of grace, was erroneously
considered by Court of Appeals as one of general law and should have been
considered as one of state law. New York Life Ins. Co. v Jackson (1938) 304 US
261, 82 L Ed 1329, 58 S Ct 871.
132. Cancellation
In suit in federal court in Missouri to cancel two insurance reinstatements alleged to
have been fraudulently procured, questions as to incontestable clause, and effect of
extended insurance, were questions of state law. Rosenthal v New York Life Ins. Co.
(1938) 304 US 263, 82 L Ed 1330, 58 S Ct 874.
In insurer's suit brought in federal district court in state of New Hampshire to cancel
double indemnity and disability provision of life insurance policy which had been
negotiated and delivered in state of Maine, where supreme court of Maine had not
passed directly upon questions, federal court could exercise independent judgment in
determining the law. Malloy v New York Life Ins. Co. (1939, CA1 NH) 103 F2d
439, cert den (1939) 308 US 572, 84 L Ed 480, 60 S Ct 86.
Federal district court dismissed petition in equity by insurer for cancellation of
policy secured by alleged fraud notwithstanding rule in state allowing same, where
insurer's remedy at law was adequate to wit defense of fraud in suit by beneficiary
under policy. Occidental Life Ins. Co. v Kielhorn (1951, DC Mich) 98 F Supp 288.
133. Liability of insurer
Whether proper test of liability of insurance company in negligently defending
action brought against insured was one of good faith or negligence was question on
which federal court followed rule of state court, there being no precedent on subject
in federal decisions. Ballard v Ocean Acci. & Guarantee Co. (1936, CA7 Wis) 86
80
F2d 449.
Unpublished Opinions
Unpublished: Because insurer's declaratory judgment action against city was brought
pursuant to 28 USCS § 1332, state law applied pursuant to 28 USCS § 1652 to
govern insurer's claim that it did not have duty to indemnify city in underlying toxic
tort suit because city breached policy's cooperation clause. Cont'l Cas. Co. v City of
Jacksonville (2008, CA11 Fla) 2008 US App LEXIS 8919.
G.Property
1.In General
134. Adverse possession
Decisions of state court on adverse possession, under state statute, were binding.
Patton's Lessee v Easton (1816) 14 US 476, 1 Wheat 476, 4 L Ed 139 (ovrld in part
by Green v Lessee of Neal (1832) 31 US 291, 6 Pet 291, 8 L Ed 402); Harpending v
Minister, Elders, & Deacons of Reformed Dutch Church (1842) 41 US 455, 16 Pet
455, 10 L Ed 1029; Balkam v Woodstock Iron Co. (1894) 154 US 177, 38 L Ed 953,
14 S Ct 1010; Bardon v Land & River Improv. Co. (1895) 157 US 327, 39 L Ed 719,
15 S Ct 650.
In action in federal district court in Puerto Rico brought by United States for
annulment of entry made in property registry canceling mortgage in favor of Puerto
Rico Hurricane Relief Commission, and to revive such mortgage, state law on
property ownership was applicable and where Puerto Rico Civil Code provided for
acquisitive prescription by control of property with just title and good faith for more
than 20 years without interruption, defendants who had owned property and had it
under their control with just title and good faith for more than 20 years without
interruption would be considered to have acquired property under adverse possession
prescriptive period, and revival of mortgage overdue for 40 years, 13 years after it
was canceled, would be unjust. United States v Deya (1974, DC Puerto Rico) 369 F
Supp 1113.
135. Boundaries
Federal courts applied state law as to boundaries and accretion. Thurlow v WaitePhillips Co. (1927, CA8 Kan) 22 F2d 781, cert den (1928) 278 US 598, 73 L Ed 528,
49 S Ct 8.
136.--Public lands
Question as to extent of federal land grant was federal question. Borax Consol., Ltd.
v Los Angeles (1935) 296 US 10, 80 L Ed 9, 56 S Ct 23, reh den (1936) 296 US 664,
80 L Ed 473, 56 S Ct 304.
81
In determining whether crown patent to land on island conveyed foreshore between
high and low water marks, federal courts followed doctrines of state in which land
lay, no constitutional question being involved. American Title & Trust Co. v Gulf
Refining Co. (1934, CA2 NY) 72 F2d 248, cert den (1934) 293 US 592, 79 L Ed
686, 55 S Ct 107.
137. Condemnation proceedings
Federal common law rather than state law applies in federal condemnation
proceedings as to issues not governed by federal statutes. United States v Miller
(1943) 317 US 369, 87 L Ed 336, 63 S Ct 276, 147 ALR 55, reh den (1943) 318 US
798, 87 L Ed 1162, 63 S Ct 557; United States v 93.970 Acres of Land (1959) 360
US 328, 3 L Ed 2d 1275, 79 S Ct 1193.
Though meaning of word "property" in provisions concerning exercise of power of
eminent domain by United States was federal question, it would normally obtain its
content by reference to local law. United States ex rel. Tennessee Valley Authority v
Powelson (1943) 319 US 266, 87 L Ed 1390, 63 S Ct 1047.
In condemnation proceedings brought by United States, laws of state wherein land
lay was referred to for method of determining what was "just compensation," and
where interest was provided for it was allowed by federal courts. United States v
Sargent (1908, CA8 Minn) 162 F 81.
In action for damages arising out of appropriation of land, state law as to measure of
damages applied. Duke Power Co. v Rutland (1932, CA4 SC) 60 F2d 194.
Decision of state court that preliminary notice in condemnation proceedings was not
required to be served on lienors, being rule of property was binding on federal
courts. Liberty Cent. Trust Co. v Greenbrier College for Women (1931, DC W Va)
50 F2d 424, affd (1931) 283 US 800, 75 L Ed 1422, 51 S Ct 493.
In proceedings for distribution of funds deposited in federal court under former 40
USCS § 258a, rights of respective claimants were to be determined by law of the
state where land lay. United States v Five Acres of Land (1943, DC Mass) 51 F Supp
117.
138. Conveyance of property
Federal courts were bound to accept interpretation given by state courts to state
statutes regulating property transfers. Holt v Crucible Steel Co. (1912) 224 US 262,
56 L Ed 756, 32 S Ct 414.
Question concerning effect of purchase under foreclosure or alternative taking of
voluntary deed as constituting payment, or as extinguishing lien, was question of
local law concerning which state court had conclusive authority. North Side Canal
82
Co. v Idaho Farms Co. (1939, CA9 Idaho) 107 F2d 481, reh den (1940, CA9 Idaho)
109 F2d 354.
139.--Deeds
State laws as to registering of deeds controlled in federal courts and were given
construction which had been generally accepted in state. M'Keen v Delancy's Lessee
(1809) 9 US 22, 5 Cranch 22, 3 L Ed 25.
Construction and effect of conveyance between private parties is matter as to which
federal court must follow court of state. East Cent. East Cent. Eureka Mining Co. v
Central Eureka Mining Co. (1907) 204 US 266, 51 L Ed 476, 27 S Ct 258.
Decision upholding form of married woman's acknowledgment under state statute
was binding on federal court in considering validity of same acknowledgment form.
Berry v Northwestern & P. Hypotheek Bank (1898, CA9 Idaho) 93 F 44.
Laws of state applied in holding that child born after execution of deed took nothing
thereunder. Clemmens v Morris (1938, DC W Va) 24 F Supp 380.
140.--Fraudulent conveyances
Court of Appeals followed construction of Uniform Fraudulent Conveyance Act by
highest court of state. Irving Trust Co. v Finance Service Co. (1933, CA2 NY) 63
F2d 694, cert den (1933) 289 US 763, 77 L Ed 1506, 53 S Ct 796; O'Sullivan v
Donohue (1936, DC Mass) 14 F Supp 605.
Whether conveyance was fraudulent as to creditors was determined through
interpretation of local statutes by federal courts. National City Bank v Continental
Nat'l Bank & Trust Co. (1936, CA10 Utah) 83 F2d 134.
State legislation permitting contract creditor to get equitable relief against fraudulent
conveyance was without effect upon equitable power of federal court. Essenkay
Corp. v Mangel Stores Corp. (1932, DC NY) 10 F Supp 50.
Actions brought in federal district courts to challenge transfers of property as being
fraudulent as to creditors as to substantive law are governed wholly by state law.
American Surety Co. v Edwards & Bradford Lumber Co. (1944, DC Iowa) 57 F
Supp 18.
141.--Indian lands
Decision of state court setting aside deed of Indian as violative of restrictions in act
of Congress was conclusive in federal court. Fulsom v Quaker Oil & Gas Co. (1928,
DC Okla) 28 F2d 398, affd (1929, CA8 Okla) 35 F2d 84.
83
142. Duty to adhere to state property rules
Where rule of property had been established by highest court of state, federal court
was bound to follow it. Guffey v Smith (1915) 237 US 101, 59 L Ed 856, 35 S Ct
526.
Controverted issues in federal court involving law of real estate in Louisiana had to
be determined by statutes and decisions of that state. Bergeron v Louisiana Land &
Exploration Co. (1938, CA5 La) 95 F2d 47.
Decisions of state supreme court and of inferior federal courts, establishing rule of
property, were adhered to strictly. Dunn v Micco (1939, CA10 Okla) 106 F2d 356,
cert den (1939) 308 US 620, 84 L Ed 518, 60 S Ct 296, reh den (1940) 308 US 639,
84 L Ed 531, 60 S Ct 382.
Where issues in federal court and in state court were for all practical purposes
identical and had been decided by state court adversely to plaintiff's theory, federal
district court properly followed state court decision. Waterhouse v Hoover (1953,
CA6 Ohio) 203 F2d 171, 52 Ohio Ops 83, 67 Ohio L Abs 56, cert den (1953) 346
US 827, 98 L Ed 351, 74 S Ct 46.
Rule of property prevailing in state, and changes in that rule, were recognized in
administering federal income tax law. Hirschi v United States (1929) 67 Ct Cl 637, 7
AFTR 9078, cert den (1929) 280 US 576, 74 L Ed 627, 50 S Ct 30.
Rules of property ownership fall under realm of state law to which federal courts
must normally defer; federal courts are also bound to follow authoritative
construction of such rules by state courts. United States v Deya (1974, DC Puerto
Rico) 369 F Supp 1113.
143.--Absence of state court decision
Where no local rule of property has been declared by highest court of state at time
rights of parties accrued, it is not only right but duty of federal court to exercise its
independent judgment on matter, as it does in question of commercial law, or
general jurisprudence. Medical Arts Bldg. Co. v Minnesota Loan & Trust Co. (1935,
CA8 Minn) 78 F2d 937, 101 ALR 770.
144.--State in which situated
Status of real property was governed by law of state in which it was situated. Woods
v Naimy (1934, CA9 Wash) 69 F2d 892; Hubbird v Goin (1905, CA8 Iowa) 137 F
822; Fensky v Campbell (1923, CA8 Kan) 290 F 83; Burdine v Southern Public
Utilities Co. (1926, CA4 SC) 11 F2d 29; Brown v Leo (1926, CA2 NY) 12 F2d 350;
Williams v Atlantic C. L. R. Co. (1927, CA4 SC) 17 F2d 17; Paepcke v Kirkman
(1932, CA5 Miss) 55 F2d 814; In re Kings County Real Estate Corp. (1933, CA2
84
NY) 67 F2d 895; Medical Arts Bldg. Co. v Minnesota Loan & Trust Co. (1935, CA8
Minn) 78 F2d 937, 101 ALR 770; Fletcher v Delaware, L. & W. R. Co. (1935, CA2
NY) 79 F2d 306.
Although meaning of "property" in USCS Constitution, Amendment 5, is federal
question, it will normally obtain its content by reference to local law. California v
United States (1968, CA9 Cal) 395 F2d 261.
Arkansas substantive law was applicable in diversity action in Federal District Court
in Arkansas to enjoin Virginia, Michigan, and Delaware corporations from
continuing operation of bromine plant located adjacent to plaintiff's land in
Arkansas, but where issue has not been determined by highest Arkansas court, task
of federal court is to rule as it believes highest Arkansas court would rule if issue
were presented to it. Young v Ethyl Corp. (1975, CA8 Ark) 521 F2d 771, 53 OGR
111.
145.--State statutes
In cases depending on statutes of state, and more especially in those respecting titles
to land, construction of state where that construction was settled and could be
ascertained was adopted. Polk's Lessee v Wendal (1815) 13 US 87, 9 Cranch 87, 3 L
Ed 665; Jackson ex dem. St. John v Chew (1827) 25 US 153, 12 Wheat 153, 6 L Ed
583; Gardner v Collins (1829) 27 US 58, 2 Pet 58, 7 L Ed 347, 4 AFTR 4503; Ross
v M'Lung (1832) 31 US 283, 6 Pet 283, 8 L Ed 400; Green v Lessee of Neal (1832)
31 US 291, 6 Pet 291, 8 L Ed 402; Van Rensselaer v Kearney (1851) 52 US 297, 11
How 297, 13 L Ed 703; Beauregard v New Orleans (1856) 59 US 497, 18 How 497,
15 L Ed 469; Morgan v Curtenius (1858) 61 US 1, 20 How 1, 15 L Ed 823; Jeter v
Hewitt (1860) 63 US 352, 22 How 352, 16 L Ed 345; Suydam v Williamson (1861)
65 US 427, 24 How 427, 16 L Ed 742; Christy v Pridgeon (1866) 71 US 196, 4 Wall
196, 18 L Ed 322; Nichol v Levy (1867) 72 US 433, 5 Wall 433, 18 L Ed 596.
State decisions construing state statute and establishing rule of property were
controlling in federal courts. Weber v Lorenzen (1923, CA8 Iowa) 292 F 41; Edward
Hines Yellow Pine Trustees v Martin (1924, CA5 Miss) 296 F 442, affd (1925) 268
US 458, 69 L Ed 1050, 45 S Ct 543.
Interpretation of recording statute by highest court of state was binding on federal
court. Firestone Tire & Rubber Co. v Cross (1927, CA4 SC) 17 F2d 417; Wiltshire v
Warburton (1932, CA4 Va) 59 F2d 611; In re Cunningham (1933, CA4 NC) 64 F2d
296; General Motors Acceptance Corp. v Kline (1935, CA9 Wash) 78 F2d 618, cert
den (1936) 296 US 655, 80 L Ed 466, 56 S Ct 381.
State statutes and decisions in respect to titles to real property were binding on
federal court. Collins v Streitz (1938, CA9 Ariz) 95 F2d 430, cert den (1938) 305 US
608, 83 L Ed 387, 59 S Ct 67.
85
In action in federal district court in Puerto Rico brought by United States for
annulment of entry made in property registry canceling mortgage in favor of Puerto
Rico Hurricane Relief Commission, and to revive such mortgage, state law on
property ownership was applicable and where Puerto Rico Civil Code provided for
acquisitive prescription by control of property with just title and good faith for more
than 20 years without interruption, defendants who had owned property and had it
under their control with just title and good faith for more than 20 years without
interruption would be considered to have acquired property under adverse possession
prescriptive period, and revival of mortgage overdue for 40 years, 13 years after it
was canceled, would be unjust. United States v Deya (1974, DC Puerto Rico) 369 F
Supp 1113.
146. Government land claims
Federal common law rather than state law applies in suits in which United States
asserts claim to land. United States v Fullard-Leo (1947) 331 US 256, 91 L Ed 1474,
67 S Ct 1287; Utah v United States (1971) 403 US 9, 29 L Ed 2d 279, 91 S Ct 1775,
2 Envt Rep Cas 1759, 1 ELR 20250.
147. Homesteads
Federal courts were bound by construction placed by highest state court upon
homestead laws of such state. Green v Root (1893, DC Iowa) 62 F 191.
On question of validity of conveyances by husband and wife to third person and
back to wife, construction by Florida supreme court of constitutional homestead
provision was binding on federal court. Croker v Croker (1925, DC Fla) 7 F2d 218.
On question of priority between homestead rights and purchase-money mortgage,
federal court followed decisions of state court. In re Levan (1925, DC La) 10 F2d
240.
Whether or not certain property of bankrupt constituted his homestead was
determined by state law. In re Booth (1937, DC Okla) 18 F Supp 79.
148. Improvements
Statutes and decisions of state relating to compensation for improvements in good
faith on realty were followed in federal courts. McClaskey v Barr (1894, CCD Ohio)
62 F 209.
149. Injury to real property
Federal court of equity, in suit to quiet title, could not allow treble damages fixed by
state statute for trespass in cutting timber. Williamson v Chicago Mill & Lumber
Corp. (1932, CA8 Ark) 59 F2d 918.
86
In determining measure of damages in action for negligent destruction of farm
buildings, federal courts accepted decisions of state court wherein damages arose.
Cameron, Joyce & Co. v McLouth (1934, CA7 Ill) 70 F2d 6.
150.--Public lands
In equity case court held that in measure of damages for removing oil from public
lands it would be governed by state law "as interpreted by the decisions of the
highest court of that state." Jeems Bayou Fishing & Hunting Club v United States
(1923) 260 US 561, 67 L Ed 402, 43 S Ct 205.
Right of United States to interest upon damages obtained in action for trespass upon
federal government land in California was governed by California law. United States
v Marin Rock & Asphalt Co. (1969, CD Cal) 296 F Supp 1213, 33 OGR 12.
151. Life estates and remainders
State law was applied in determining whether contingent remainder was assignable
and passed to trustee in bankruptcy. In re Landis (1930, CA7 Ill) 41 F2d 700, cert
den (1930) 282 US 872, 75 L Ed 770, 51 S Ct 77.
On question whether, as between life tenant and remainderman, appreciation in
value of trust estate was regarded as corpus or income was determined by decisions
of courts in which trust was to be administered. Long v Rike (1931, CA7 Ill) 50 F2d
124, 81 ALR 521, cert den (1931) 284 US 657, 76 L Ed 557, 52 S Ct 35.
Where testatrix, in will probated in California, bequeathed residue estate consisting
of shares of stock in New Jersey corporation to her son during his lifetime and upon
his death to his legal children, if any, and, if he should die without issue, then to her
brothers and sister, and, after the son's death without issue, remaindermen brought
suit against corporation in federal court in New Jersey, claiming conversion of the
shares of stock by transfer thereof on endorsement of life tenant, rights and
obligations of life tenant and remaindermen were required to be determined by law
of California. Seymour v National Biscuit Co. (1939, CA3 NJ) 107 F2d 58, 126
ALR 1288, cert den (1940) 309 US 665, 84 L Ed 1012, 60 S Ct 590.
Pennsylvania rule as to apportionment of dividends between life tenant and
remainderman was rule of property governing in federal court in equity as well as at
law. Pierrepont v Fidelity-Philadelphia Trust Co. (1929, DC Pa) 32 F2d 608.
152. Realty or personalty
Whether certain property was realty or personalty was question of local law upon
which local decisions and statutes controlled. Waggoner Estate v Wichita County
(1927) 273 US 113, 71 L Ed 566, 47 S Ct 271.
87
Where question was whether certain chattels were part of realty subject to mortgage
and contract had been made and was to be performed in Michigan, rule of property
was involved, and federal court would follow state law. Petition of Johns-Manville
Sales Corp. (1937, CA6 Mich) 88 F2d 520.
153.--Fixtures
State law controlled as to what constituted fixtures. Union Bldg. Co. v Pennell
(1935, CA3 Pa) 78 F2d 959; In re Walker Bin Co. (1935, DC NY) 9 F Supp 367.
154. Riparian and water rights
Decisions of state's highest court relating to person's riparian rights and their
sufficiency for ferry license constituted rule of property and of decision binding
federal court. Conway v Taylor's Ex'x (1862) 66 US 603, 1 Black 603, 17 L Ed 191.
Rights and interests in tidelands, which were subject to sovereignty of state, were
matters of local law. Borax Consol., Ltd. v Los Angeles (1935) 296 US 10, 80 L Ed
9, 56 S Ct 23, reh den (1936) 296 US 664, 80 L Ed 473, 56 S Ct 304.
Apportionment of waters of inter-state stream is governed by federal common law.
Hinderlider v La Plata River & Cherry Creek Ditch Co. (1938) 304 US 92, 82 L Ed
1202, 58 S Ct 803, reh den (1938) 305 US 668, 83 L Ed 433, 59 S Ct 55 and
(superseded by statute as stated in International Paper Co. v Ouellette (1987) 479 US
481, 93 L Ed 2d 883, 107 S Ct 805, 25 Envt Rep Cas 1457, 17 ELR 20327); Illinois
v Milwaukee (1972) 406 US 91, 31 L Ed 2d 712, 92 S Ct 1385, 4 Envt Rep Cas
1001, 2 ELR 20201 (superseded by statute as stated in Philadelphia v Stepan
Chemical Co. (1982, ED Pa) 544 F Supp 1135, 17 Envt Rep Cas 1977, 12 ELR
20915) and (superseded by statute as stated in Oneida Indian Nation v County of
Oneida (1983, CA2 NY) 719 F2d 525) and (superseded by statute as stated in
Conner v Aerovox, Inc. (1984, CA1 Mass) 730 F2d 835, 20 Envt Rep Cas 1877,
1984 AMC 2507, 14 ELR 20370) and (superseded by statute as stated in State v
Champion Int'l Corp. (1986, Tenn) 709 SW2d 569, 24 Envt Rep Cas 1371, 16 ELR
20729) and (superseded by statute as stated in USW v United Eng'g (1995, CA6
Ohio) 52 F3d 1386, 19 EBC 1313, 149 BNA LRRM 2129, 130 CCH LC P 11325,
1995 FED App 135P).
Right to accretions deposited by ocean on adjoining upland property conveyed by
United States before statehood was governed by federal rather than by state law.
Hughes v Washington (1967) 389 US 290, 19 L Ed 2d 530, 88 S Ct 438.
Equal footing doctrine, whereby newly admitted states acquire title to lands
underlying navigable waters within their boundaries, does not provide basis for
common law to supersede state's application of its own law in deciding title to lands
which have re-emerged after movement of bed of navigable stream; state law should
apply unless there is present some other principle of federal law requiring that state
88
law be displaced; although federal law may fix initial boundary line between fast
lands and beds of navigable rivers within state's borders at time of state's admission
to Union, state's title to riverbed vests absolutely as of time of its admission and is
not subject to later defeasance by operation of any doctrine of federal common law.
Oregon ex rel. State Land Bd. v Corvallis Sand & Gravel Co. (1977) 429 US 363, 50
L Ed 2d 550, 97 S Ct 582, 7 ELR 20137.
Rights of riparian owners were controlled by state laws as construed by highest court
of state. Sun Co. v Gibson (1923, CA5 Tex) 295 F 118; Bellah v Phoenix Utilities
Co. (1924, DC Kan) 7 F2d 406; Ne-Bo-Shone Asso. v Hogarth (1934, DC Mich) 7 F
Supp 885, affd (1936, CA6 Mich) 81 F2d 70.
Liability for obstructing surface waters was governed by state law. McKee v
Producers' & Refiners Corp. (1931, CA10 Okla) 46 F2d 36.
Interpretation given by highest court of state to various statutes of state regulating
water rights was binding on federal courts. Oklahoma Gas & Electric Co. v Wilson
& Co. (1931, CA10 Okla) 54 F2d 596; Holbrook Irrigation Dist. v Arkansas Valley
Sugar Beet & Irrigated Land Co. (1931, CA10 Colo) 54 F2d 840.
What constituted surface water was determined by local law. Sandstrum v Missouri
P. R. Co. (1925, DC Kan) 39 F2d 165.
Extent of power of state to part with title to property under navigable waters to
private persons, free from subsequent regulatory control of water over land and land
itself, was state question, which had to be determined from law of state as it was
when grants were executed, and from decisions of state court then and since made.
United States v 25.88 Acres of Land (1943, DC NY) 49 F Supp 250, affd (1944,
CA2 NY) 142 F2d 487.
155. Suits for recovery of possession of land
In federal court, suits for recovery of land could only be maintained upon legal title.
Sheirburn v De Cordova (1861) 65 US 423, 24 How 423, 16 L Ed 741.
Where, as in action for possession of land under water, questions were mainly of
local character, settled rule of decision in courts of state was controlling. Lowndes v
Huntington (1894) 153 US 1, 38 L Ed 615, 14 S Ct 758.
156. Taxation
Decisions by state court with regard to property did not necessarily govern federal
courts in matter of federal taxation. Bankers' Pocahontas Coal Co. v Commissioner
(1932, CA4) 55 F2d 626, 10 AFTR 1139, affd (1932) 287 US 308, 77 L Ed 325, 53
S Ct 150, 3 USTC P 998, 11 AFTR 1089 (superseded by statute as stated in Eck v
89
Commissioner (1992) 99 TC 1) and affd sub nom Strother v Burnet (1932) 287 US
314, 77 L Ed 330, 53 S Ct 152, 3 USTC P 999, 11 AFTR 1091.
Federal courts did not follow state decisions as to what constituted real property
where question involved was construction of federal income tax laws. Hirschi v
United States (1929) 67 Ct Cl 637, 7 AFTR 9078, cert den (1929) 280 US 576, 74 L
Ed 627, 50 S Ct 30.
157. Title to lands
Dispute over title to lands owned by Federal Government is governed by federal law,
although Federal Government may, if it desires, choose to select state rule as federal
rule. Hughes v Washington (1967) 389 US 290, 19 L Ed 2d 530, 88 S Ct 438.
Upon admission to Union, state's title to lands underlying navigable waters within its
boundaries is conferred not by Congress but by Constitution itself, and title thus
acquired by state is absolute so far as any federal principle of land titles is
concerned. Oregon ex rel. State Land Bd. v Corvallis Sand & Gravel Co. (1977) 429
US 363, 50 L Ed 2d 550, 97 S Ct 582, 7 ELR 20137.
Decision that state had no interest in lands in controversy was binding on federal
court. United States ex rel. Louisiana v Boarman (1914, CA5 La) 217 F 757, affd
(1917) 244 US 397, 61 L Ed 1222, 37 S Ct 605.
In determining title to lands reserved from Indian lands in Indian territory for
railroad purposes, and abandoned by railroad companies, provision of federal statute
for reversion of title to owner of legal subdivision out of which land was reserved
was controlling, and not law of state. United States v Magnolia Petroleum Co. (1939,
CA10 Okla) 110 F2d 212.
On question as to whether, when property was brought at tax sale by one cotenant,
other co-owners had right to require their co-owner to make them title in proportion
of their former co-ownership, decisions of state court were binding upon federal
court. Buchanan v Pitts (1940, CA5 La) 111 F2d 599.
In diversity action to quiet title to land, state law is applicable. United States
Gypsum Co. v Greif Bros. Cooperage Corp. (1968, CA8 Ark) 389 F2d 252.
Decisions of state courts in foreclosure suits and suits to quiet title were binding on
federal courts as determining title to realty. Roberts v Brooks (1896, CCD NY) 71 F
914, affd (1897, CA2 NY) 78 F 411.
158. Use of lands
90
Decision of state supreme court holding zoning act and ordinance thereunder
constitutional was binding on federal court. Cromwell-Franklin Oil Co. v Oklahoma
City (1930, DC Okla) 14 F Supp 370.
2.Leases and Leasehold Interests
159. Generally
State law rather than federal common law controls as to rights under land grant or
lease from Federal Government. United States v Oklahoma Gas & Electric Co.
(1943) 318 US 206, 87 L Ed 716, 63 S Ct 534; Wallis v Pan American Petroleum
Corp. (1966) 384 US 63, 16 L Ed 2d 369, 86 S Ct 1301, 25 OGR 208.
Decision that 99-year lease was sale was not binding on federal court in income tax
case. Rosenberger v McCaughn (1928, CA3 Pa) 25 F2d 699, 6 AFTR 7569, cert den
(1928) 278 US 604, 73 L Ed 532, 49 S Ct 10.
Whether agreements were leases or licenses was local question and in its
determination decisions of court of last resort in state were binding on federal court.
Taylor v R. C. Maxwell Co. (1929, CA1 Mass) 31 F2d 711.
160. Construction of lease
Rule of state supreme court was adopted by federal court in construing lease. Clovis
v Carson Oil & Gas Co. (1935, DC Mich) 11 F Supp 797, app dismd (1937, CA6
Mich) 86 F2d 995.
161. Damages upon breach of lease
State rule that landlord had to mitigate damages for breach by tenant by rerenting
was applicable in federal court. Walsh v E. G. Shinner & Co. (1927, CA3 Del) 20
F2d 586.
In suit in federal court involving question whether lessee was entitled to special
damages for breach of lease by refusal of landlord to give possession, state law
governed. Darling Shops, Inc. v Brack (1938, CA8 Ark) 95 F2d 135.
162. Indian lands
Construction of Oklahoma laws by courts of that state was binding on federal courts
as to matter of validity of Indian oil and gas leases. Jones v Prairie Oil & Gas Co.
(1927) 273 US 195, 71 L Ed 602, 47 S Ct 338.
State decision as to validity of Indian lease was not binding on federal courts. United
States v Haddock (1927, CA8 Okla) 21 F2d 165.
United States was entitled to recover advance royalties and rents due and unpaid on
leases made by Indian allottees and canceled by United States, notwithstanding
91
provision of state statute that "When the hiring of a thing is terminated before the
time originally agreed upon, the hirer must pay the due proportion of the hire for
such use as he has actually made of the thing, unless such use is merely nominal, and
of no benefit to him," such state statute being contrary to federal administrative
regulations relative to such leases. Montana Eastern Ltd. v United States (1938, CA9
Mont) 95 F2d 897.
163. Landlord and tenant relationship
Rights under lease were determined by state law. United Shoe Machinery Corp. v
Paine (1928, CA1 NH) 26 F2d 594, 58 ALR 1398.
164. Mineral leases
State decision as to character of lease of coal land was not binding on federal courts
in construing lease for purpose of federal Income Tax Act. Rosenberger v
McCaughn (1928, CA3 Pa) 25 F2d 699, 6 AFTR 7569, cert den (1928) 278 US 604,
73 L Ed 532, 49 S Ct 10.
Rights under coal mining lease were to be determined by decisions of highest court
of state where property was located. Hendon v De Bardeleben Coal Corp. (1929,
CA5 Ala) 30 F2d 686; Rocky Mountain Fuel Co. v Albion Realty & Sec. Co. (1934,
CA10 Colo) 70 F2d 212.
In construing mineral lease, court of appeals followed latest decision of state court
which reviewed and distinguished prior conflicting decisions. Sabine Lumber Co. v
Broderick (1937, CA5 La) 88 F2d 586, cert den (1937) 302 US 711, 82 L Ed 549, 58
S Ct 31.
165. Oil and gas lease
Where it was settled in state court that holder of oil and gas lease could not maintain
action of ejectment, such action could not be maintained in federal courts. Guffey v
Smith (1915) 237 US 101, 59 L Ed 856, 35 S Ct 526.
Decision of state court that drilling of well on one tract contained in oil and gas lease
continued lease as to another tract contained therein was rule of property binding on
federal courts. Harrell v United Carbon Co. (1931, CA5 La) 52 F2d 790.
Decision of state supreme court that oil and gas lease conveyed interest in land,
which trustees of state hospital were without authority to execute, was followed by
federal court. Oil Products Corp. v Conner (1936, CA5 Miss) 83 F2d 985.
Determination of interest created by oil and gas lease depended upon rules of
property, and federal court had duty of following applicable law of state established
by its legislature or highest court. Laugharn v Bank of America Nat'l Trust & Sav.
92
Ass'n (1937, CA9 Cal) 88 F2d 551, cert den (1937) 301 US 699, 81 L Ed 1354, 57 S
Ct 929.
Issue of abandonment of gas and oil lease presented a question of local law and must
be determined in accordance with state decisions. Carter Oil Co. v Mitchell (1939,
CA10 Okla) 100 F2d 945.
Contract for oil and gas lease was one regarding title to real property and was
covered by laws of state where land was located. Ladd v Foster Inv. Co. (1928, DC
Kan) 26 F2d 698.
Construction and effect of oil and gas leases, constituting rule of property, was
followed. Kister Oil Development Corp. v Young (1928, DC Ky) 27 F2d 433.
166. Rents and deposits
Rule announced by state court that equitable assignee in possession was liable for
rent was followed in federal court. Medical Arts Bldg. Co. v Minnesota Loan &
Trust Co. (1935, CA8 Minn) 78 F2d 937, 101 ALR 770.
Right of landlord to withhold deposit was rule of property. In re Nathanson (1924,
DC NY) 12 F2d 622.
Priority of claim of bankrupt's landlord for rent was determined under law as
construed by highest court of state. In re Wall (1932, DC Miss) 60 F2d 573.
Kentucky statute making tenant liable for double rent for wrongfully holding over
was applied in federal court. Pioneer Coal Co. v Bush (1936, DC Ky) 16 F Supp
117, app dismd (1938, CA6 Ky) 99 F2d 1008.
167. State of execution or performance
Where bankrupt executed lease in New York on Pennsylvania land, Pennsylvania
law controlled as to rights in rem under lease, but New York law controlled as to
rights in personam; bankruptcy law applied where controversy was submitted to it.
In re Barnett (1926, CA2 NY) 12 F2d 73, cert den (1926) 273 US 699, 71 L Ed 846,
47 S Ct 94.
168. Timber leases
Federal courts were bound by state court's interpretation of timber contract. Thomas
v Gates (1929, CA4 Va) 31 F2d 828, cert den (1929) 280 US 559, 74 L Ed 614, 50 S
Ct 18.
3.Mortgages and Liens
169. Chattel mortgages
93
To what extent chattel mortgage was valid was local question, and decisions of state
court were followed by federal court. Cornelius v C. C. Pictures, Inc. (1925, CA2
NY) 5 F2d 157; Jones v Third Nat'l Bank (1926, CA8 Mo) 13 F2d 86; In re Simpson
(1929, DC Idaho) 31 F2d 317, affd on other grounds (1929, CA9 Idaho) 35 F2d 840.
State law as regards rights under chattel mortgage was binding on bankruptcy court.
In re Packard Press, Inc. (1925, CA2 NY) 5 F2d 633.
Chattel mortgage law of state was controlling in federal courts. Murphy Hotels Corp.
v Central Nat'l Bank Sav. & Trust Co. (1927, CA6 Ohio) 18 F2d 719, cert den
(1927) 275 US 534, 72 L Ed 412, 48 S Ct 30.
170.--After acquired chattels
Mere inclusion of after-acquired chattels within terms of mortgage did not make lien
on them effective against trustee in bankruptcy, but effectiveness against trustee
turns on state law. Rosen v Haines-Ce Brook, Inc. (1943, DC Mass) 52 F Supp 791.
171.--Recording
State law with reference to recording chattel mortgages or like instruments was
binding on federal courts. General Motors Acceptance Corp. v Kline (1935, CA9
Wash) 78 F2d 618, cert den (1936) 296 US 655, 80 L Ed 466, 56 S Ct 381.
Federal court followed decisions of state courts construing state statute relating to
filing chattel mortgage. In re Triangle Printing Co. (1932, DC Okla) 1 F Supp 329.
172. Corporate mortgages
If statute relating to corporate mortgages had been determined by state court as
mandatory or directory, federal court would have had to conform to such
interpretation. In re Victoria Fusilli Co. (1935, CA2 NY) 79 F2d 611.
173. Liens
State laws as to lien of judgment on property were followed in federal courts.
Massingill v Downs (1849) 48 US 760, 7 How 760, 12 L Ed 903.
Federal courts recognized liens allowed by statutes of the states. Culhane v
Anderson (1927, CA8 Neb) 17 F2d 559.
State court decisions were controlling as to statutory liens upon fixed property within
such state. Ex parte Benevolent & Protective Order of Elks (1934, CA2 NY) 69 F2d
816, cert den (1934) 292 US 647, 78 L Ed 1497, 54 S Ct 780; American Tank Co. v
Continental & Commercial Trust & Sav. Bank (1924, CA8 Ark) 3 F2d 122;
94
McDonald Amusement Co. v Fleming Bros. Lumber Co. (1929, CA10 Wyo) 35 F2d
638.
174.--Mechanics and materialmen
Phrase in mechanics' lien law, "in and about the improvement," not having been
construed, left federal court unrestricted to interpret scope of surety's contract under
such statute, although ruling of federal Supreme Court under similar federal statute
afforded standard. Maryland Casualty Co. v Portland Const. Co. (1934, CA2 Vt) 71
F2d 658.
175.--Priorities between lien claimants
Effect and operation of lien in relation to claim of priority by United States under 31
USCS § 191 was always federal question. Illinois ex rel. Gordon v Campbell (1946)
329 US 362, 91 L Ed 348, 67 S Ct 340.
Questions as to validity or priority as between judgment liens and mechanic's liens
were determined by state courts if possible, and bankruptcy court could stay sale of
bankrupt's estate upon execution pending execution of matter in state court. In re
Kernick Divide Mining Co. (1933, DC Nev) 3 F Supp 323.
176.--Waiver of rights
Admiralty court would apply rebuttable presumption indulged by state courts that
acceptance of note and mortgage waived maritime lien. In re Sagittarius (1932, DC
Mass) 1932 AMC 244.
177.--Real estate mortgages
Decision holding valid power of sale in mortgage similar to one before federal court
was followed. Blackshear v First Nat'l Bank (1919, CA5 Ala) 261 F 601.
In absence of state decisions, federal court determined construction of mortgage.
First Sav. Bank & Trust Co. v Stuppi (1924, CA8 NM) 2 F2d 822.
Question whether real estate mortgage by virtue of its personal property clause
created valid lien on kitchen utensils, furniture, and other chattels not attached to
building as fixtures but used in catering business operated therein by bankrupt
mortgagor was determined in accordance with local law. In re 671 Prospect Ave.
Holding Corp. (1939, CA2 NY) 105 F2d 960.
Federal law, not state law, was applicable to questions of federal rights and liabilities
involving vendee account loan program of the veterans administration. United States
v Wells (1968, CA5 Fla) 403 F2d 596.
95
Rule that remote grantee was liable to mortgagee upon assumption of debt was
binding on federal court. Calder v Richardson (1935, DC Fla) 11 F Supp 948.
In determination of question whether deed, option to repurchase of land conveyed,
and lease of part thereof were in fact mortgage, federal courts applied law of state as
declared in decisions of its highest court. Chinn v Llangollen Stables, Inc. (1938, DC
Ky) 25 F Supp 389, affd (1940, CA6 Ky) 109 F2d 66.
178.--Right of redemption
State statute giving one year to redeem from foreclosure sale was applicable in
federal court, where statute was in existence when mortgage was made. Brine v
Insurance Co. (1878) 96 US 627, 6 Otto 627, 24 L Ed 858.
H.Taxation
1.In General
179. Assessments for public improvement
In proceeding for writ of mandamus to compel tax levy by county officers for
payment of overdue local improvement benefit assessments on property owned by
county, state law was controlling rule of decision as to both substantive and
procedural rights of parties. Huddleston v Dwyer (1944) 322 US 232, 88 L Ed 1246,
64 S Ct 1015.
State law controlled validity of assessment for municipal improvement. Cowan Inv.
Corp. v Florence (1935, DC Ala) 11 F Supp 973.
180. Drainage districts
Construction of state statute relating to drainage districts and taxes on lands therein,
placed thereon by state's highest court, was binding in federal courts. Everglades
Drainage Dist. v Florida Ranch & Dairy Corp. (1935, CA5 Fla) 74 F2d 914, reh den
(1935, CA5 Fla) 75 F2d 1013.
181. Streets and sidewalks
In action in federal district court for mandamus compelling tax levy in street
improvement proceeding, law of state was controlling with respect to substantive
rights of parties. Huddleston v Dwyer (1944, CA10 Okla) 145 F2d 311.
182. Proceedings for collection of taxes
State court decision as to failure of tax notice to give correct name of owner was
controlling in federal court. Mathis v Ligon (1930, CA10 Okla) 37 F2d 635, reh den
(1930, CA10 Okla) 39 F2d 455 and cert den (1930) 282 US 846, 75 L Ed 751, 51 S
Ct 26.
96
Government had plenary power over property of taxpayers to collect taxes and was
in no way subject to state laws. Metropolitan Life Ins. Co. v United States (1939,
CA6 Mich) 107 F2d 311, 39-2 USTC P 9771, 23 AFTR 876, cert den (1940) 310 US
630, 84 L Ed 1400, 60 S Ct 978.
In action brought by Canadian province in United States District Court for recovery
on judgment for taxes awarded against United States citizens by Canadian court,
District Court would apply rule of defendant's state, that judgments from foreign
country for taxes were not enforceable in state courts, in denying relief to Canadian
province. Her Majesty the Queen in Right of Province of British Columbia v
Gilbertson (1979, CA9 Or) 597 F2d 1161.
Construction of state statute, respecting assessment and sale of land for taxes, by
highest court of state, was binding upon federal court. United States v Klink (1933,
DC Wyo) 3 F Supp 208.
183.--Lien for unpaid taxes
State statute fixing lien of state taxes was controlling in federal courts. County of
Spokane v United States (1928) 278 US 585, 73 L Ed 520, 49 S Ct 10.
Whether city and county treasurer's claim for taxes was lien or was due or owing had
to be determined according to state laws as construed by its highest courts. In re
Davenport Dry Goods Co. (1925, DC Iowa) 9 F2d 477.
Texas rule that tax claim or lien constituted cloud upon title was followed in federal
courts. State Life Ins. Co. v Wichita County Water Improv. Dist. (1937, DC Tex) 18
F Supp 834.
184.--Payment from proceeds of judicial sales
State statute providing for payment of taxes from proceeds of judicial sale was not
rule of property obligatory on federal court of equity. Mercantile Trust Co. v
Tennessee C. R. Co. (1923, CA6 Tenn) 294 F 483.
Under Pennsylvania law, owner of mortgaged property was liable for taxes, and
where mortgage was foreclosed taxes were not taken from proceeds at foreclosure
sale, but were collected from owner of property for taxable years in question. White
v First Nat'l Bank (1938, DC Pa) 24 F Supp 290.
185.--Prevention of assessment or collection
State statute requiring payment of illegal tax as basis for suit to cancel assessment
was not applicable to suit by United States to cancel void assessment on exempt
Indian lands. Board of County Comm'rs v United States (1933, CA10 Okla) 64 F2d
775.
97
Construction by highest court of state that statute authorizing court to enjoin illegal
tax levies did not create right to be heard on excessive valuation was held binding on
federal court. Orcutt v Crawford (1936, CA10 Wyo) 85 F2d 146, cert den (1936)
299 US 594, 81 L Ed 438, 57 S Ct 119.
In determining whether taxpayer whose property had been overassessed had
adequate remedy at law, federal court would construe state tax act in light of state
constitution as interpreted by state's highest court. Hackensack Water Co. v Oradell
(1936, DC NJ) 17 F Supp 39.
186. Refund or recovery of taxes or penalties
State law providing exclusive remedy for recovery of money wrongfully exacted by
state as taxes was valid. Burrill v Locomobile Co. (1922) 258 US 34, 66 L Ed 450,
42 S Ct 256.
Decision of state supreme court that state was mere nominal party in action instituted
by taxpayer in name of state for recovery of penalty was binding on federal court.
Oklahoma ex rel. Williams v Oklahoma Natural Gas Corp. (1936, CA10 Okla) 83
F2d 986.
187.--Administrative remedies
State decision that administrative remedy was open for correction of erroneous tax,
and that without resort to such remedy judicial remedy would not lie, was followed
in federal court in considering validity of tax assessed against national bank. First
Nat'l Bank v Board of County Comm'rs (1924) 264 US 450, 68 L Ed 784, 44 S Ct
385.
188.--Taxes illegally assessed or collected
Suit by United States against county in Kansas to recover taxes collected by county
upon land which had been allotted to Pottawatomie Indian under General Allotment
Act of 1877 though patent was issued, but without consent of allottee, was in field in
which federal power was both supreme and exclusive. Board of Comm'rs v United
States (1938, CA10 Kan) 100 F2d 929, mod on other grounds (1939) 308 US 343,
84 L Ed 313, 60 S Ct 285.
2.State Taxes
189. Generally
Supreme Court would respect candid opinion of state court that taxing statute was
not violative of Fourteenth Amendment where there were many local elements
involved in question. New York, Philadelphia & Norfolk Tel. Co. v Dolan (1924)
265 US 96, 68 L Ed 916, 44 S Ct 450.
98
Supreme Court of United States would decide for itself character of tax in
determining its constitutionality under federal Constitution. Storaasli v Minnesota
(1931) 283 US 57, 75 L Ed 839, 51 S Ct 354; Gregg Dyeing Co. v Query (1932) 286
US 472, 76 L Ed 1232, 52 S Ct 631, 84 ALR 831; Stewart Dry Goods Co. v Lewis
(1935) 294 US 550, 79 L Ed 1054, 55 S Ct 525, reh den (1935) 295 US 768, 79 L Ed
1709, 55 S Ct 652; Schuylkill Trust Co. v Pennsylvania (1935) 296 US 113, 80 L Ed
91, 56 S Ct 31; Carmichael v Southern Coal & Coke Co. (1937) 301 US 495, 81 L
Ed 1245, 57 S Ct 868, 109 ALR 1327.
On appeal from state court to United States Supreme Court, where validity of tax
under federal Constitution was challenged, court had to determine for itself upon
what tax was laid; court was concerned with realities, and not nomenclature. Senior
v Braden (1935) 295 US 422, 79 L Ed 1520, 55 S Ct 800, 2 Ohio Ops 460, 100 ALR
794.
State taxation was local matter, and state decisions construing constitutional
provisions and statutes relating to same were binding on federal courts. United States
ex rel. Pioneer Const. Co. v Madison County (1923, CA8 Ark) 293 F 739, cert den
(1923) 263 US 718, 68 L Ed 523, 44 S Ct 180; Conn v Ringer (1929, CA6 Ohio) 32
F2d 639; Public Nat'l Bank v Keating (1931, CA2 NY) 47 F2d 561, 81 ALR 497,
affd (1931) 284 US 587, 76 L Ed 507, 52 S Ct 137.
Question whether state statute imposed excise in year in which it was assessed or in
preceding taxable year depended on construction of state statute; question whether
impost was tax within Bankruptcy Act was for federal court to decide.
Massachusetts v Meehan (1933, CA1 Mass) 67 F2d 638, cert den (1934) 291 US
666, 78 L Ed 1057, 54 S Ct 441.
Decision of state court construing state statute was followed in federal court where
such construction amounted to limitation on taxing power of Congress. Witherbee v
Commissioner (1934, CA2) 70 F2d 696, 4 USTC P 1279, 13 AFTR 1065, cert den
(1934) 293 US 582, 79 L Ed 678, 55 S Ct 96, reh den (1934) 293 US 631, 79 L Ed
716, 55 S Ct 138, 14 AFTR 697.
Scope of taxing statute as construed by state's highest court was binding on federal
court, but in absence of such construction federal court construed the law. In re
Flatbush Gum Co. (1934, CA2 NY) 73 F2d 283, cert den (1935) 294 US 713, 79 L
Ed 1247, 55 S Ct 509.
In setting validity of tax claims in proceedings to reorganize corporate debtors, court
had to determine validity of tax in accord with laws of taxing sovereign. In re 168
Adams Bldg. Corp. (1939, CA7 Ill) 105 F2d 704, cert den (1940) 308 US 623, 84 L
Ed 520, 60 S Ct 378.
99
Since immunity of United States from state taxation under federal Constitution was
federal question, state decisions did not control, but rather those of Supreme Court of
United States. Ken Realty Co. v Johnson (1943, CA5 Ala) 138 F2d 809.
Decision of state court upholding classification of state statute relating to exemption
from taxation was controlling in federal court in determining validity of statute under
the commerce clause. Utah Power & Light Co. v Pfost (1931, DC Idaho) 54 F2d
803, affd (1932) 286 US 165, 76 L Ed 1038, 52 S Ct 548.
190. Income tax
On appeal from state court to United States Supreme Court, state court's
interpretation of statute taxing net receipts of foreign corporations was binding on
Supreme Court, but latter would exercise its independent judgment in determining
whether statute, with meaning given by state court, violated 14th Amendment of
Constitution of United States. Hanover Fire Ins. Co. v Harding (1926) 272 US 494,
71 L Ed 372, 47 S Ct 179, 49 ALR 713; Macallen Co. v Massachusetts (1929) 279
US 620, 73 L Ed 874, 49 S Ct 432, 65 ALR 866, reh den (1929) 280 US 513, 74 L
Ed 585, 50 S Ct 14 and (superseded by statute as stated in Commissioner of Revenue
v Massachusetts Mut. Life Ins. Co. (1981) 384 Mass 607, 428 NE2d 297) and (ovrld
as stated in Washington v United States (1983) 460 US 536, 75 L Ed 2d 264, 103 S
Ct 1344, 30 CCF P 70883); Educational Films Corp. v Ward (1931) 282 US 379, 75
L Ed 400, 51 S Ct 170, 71 ALR 1226.
In determining whether tax against corporations measured by income was income
tax or privilege tax, opinion of state court as to nature of tax was given consideration
and weight, but it was not conclusive. Macallen Co. v Massachusetts (1929) 279 US
620, 73 L Ed 874, 49 S Ct 432, 65 ALR 866, reh den (1929) 280 US 513, 74 L Ed
585, 50 S Ct 14 and (superseded by statute as stated in Commissioner of Revenue v
Massachusetts Mut. Life Ins. Co. (1981) 384 Mass 607, 428 NE2d 297) and (ovrld
as stated in Washington v United States (1983) 460 US 536, 75 L Ed 2d 264, 103 S
Ct 1344, 30 CCF P 70883); Educational Films Corp. v Ward (1931) 282 US 379, 75
L Ed 400, 51 S Ct 170, 71 ALR 1226.
Federal courts were bound by construction of state income tax statute by its highest
court. Richardson v Conway (1931, CA7 Wis) 49 F2d 554.
191. Inheritance tax
On appeal from state court to United States Supreme Court, latter was bound by
decision of former as to meaning and application of state inheritance tax statute.
Stebbins v Riley (1925) 268 US 137, 69 L Ed 884, 45 S Ct 424, 44 ALR 1454.
Whether California tax was succession tax or estate tax was determined by reference
to decisions of its highest court. United States v Kombst (1932) 286 US 424, 76 L
Ed 1201, 52 S Ct 616, 3 USTC P 944, 11 AFTR 19.
100
Construction of state inheritance tax statute by state supreme court was adopted by
federal courts. Kearns v Dunbar (1922, DC Utah) 292 F 1013, 4 AFTR 3973.
192. Personal property tax
Illinois supreme court's decision that personal property tax law applied to average
number of railway cars of domestic corporation found in such state was most
persuasive, if not controlling, on federal court determining applicability of such act
to cars of foreign corporation. Union Tank Car Co. v McKnight (1936, CA7 Ill) 84
F2d 421.
193. Privilege, license or occupation tax
Interpretation by state court of statute imposing tax on insurance companies would
eventually be binding on statutory federal court of three judges in which fraternal
society sought to enjoin collection of tax as not applicable to it. Modern Woodmen
of America v Casados (1936, DC NM) 15 F Supp 483.
Who were physicians or other practitioners within meaning of Harrison Narcotic Act
was determined by law of state where applicant resided. Perry v Larson (1938, DC
Fla) 25 F Supp 728, affd (1939, CA5 Fla) 104 F2d 728.
194. Products or production tax
Decision of supreme court of Wyoming construing constitution and statutes of
Wyoming and holding that gross products tax was not severance tax was binding on
federal court. Board of Comm'rs v Bernardin (1934, CA10 Wyo) 74 F2d 809, cert
den (1935) 295 US 731, 79 L Ed 1680, 55 S Ct 645.
State court determination as to whether mine production tax was tax on personal
property or real property was binding upon federal court. First Nat'l Bank v Central
Coal & Coke Co. (1933, DC Wyo) 3 F Supp 433, mod (1934, CA10 Wyo) 74 F2d
809, cert den (1935) 295 US 731, 79 L Ed 1680, 55 S Ct 645.
195. Real property tax
Status of taxes as liens on real property was determined by laws of particular state.
United States v 232.68 Acres of Land (1944, DC Tenn) 57 F Supp 891.
196. Transfer tax
State construction of state transfer tax law was followed by federal court. Keith v
Johnson (1926) 271 US 1, 70 L Ed 795, 46 S Ct 415, 1 USTC P 170, 5 AFTR 6005,
44 ALR 1432.
3.Federal Taxes
197. Generally
101
Federal courts were bound by state statutes as construed by highest courts of state,
but were not required to adopt state definition of terms in applying federal taxing
acts though they could accept such definitions in absence of definitions in federal
act. Pease v Commissioner (1936, CA6) 83 F2d 122, 36-1 USTC P 9236, 17 AFTR
934, cert den (1936) 299 US 562, 81 L Ed 414, 57 S Ct 25.
In suit by purchaser against processor to recover processing tax on products sold and
delivered by defendant to plaintiff, which defendant was relieved from paying to
government because of declared unconstitutionality of Agricultural Adjustment Act,
and which suit was predicated on tax provisions of contracts between purchaser and
processor, court of appeals necessarily followed state court decisions construing
similar contracts. Moundridge Milling Co. v Cream of Wheat Corp. (1939, CA10
Kan) 105 F2d 366, 39-2 USTC P 9560, 23 AFTR 174.
Legal significance of transaction under state law was not necessarily determinative
of its federal tax results. Leicht v Commissioner (1943, CA8) 137 F2d 433, 43-2
USTC P 9546, 31 AFTR 403.
While rights and obligations could be created by state law or contract, incidence of
federal tax rested with taxing power. Louisville Property Co. v Commissioner (1944,
CA6 Ky) 140 F2d 547, 44-1 USTC P 9182, 32 AFTR 133, cert den (1944) 322 US
755, 88 L Ed 1584, 64 S Ct 1268, reh den (1944) 323 US 810, 89 L Ed 646, 65 S Ct
30, 32 AFTR 1403.
Federal fiscal system was self-determined in sense that meaning of its terms did not
depend upon law of state; nevertheless when Congress imposed taxes based upon
existence of legal rights and duties it had to be understood to refer to such rights and
duties as state law created. Johnston v Helvering (1944, CA2) 141 F2d 208, 44-1
USTC P 9215, 32 AFTR 280, cert den (1944) 323 US 715, 89 L Ed 575, 65 S Ct 41.
In construing United States Internal Revenue Code, state law controlled only when
federal taxing act by express language or necessary implication made its operation
dependent upon state law. United States v Consolidated Elevator Co. (1944, CA8
Minn) 141 F2d 791, 44-1 USTC P 9284, 32 AFTR 498.
In construing federal taxing acts, local laws were determinative if taxing act so
provided, either expressly or by inference, subject to exception that taxing act was to
be interpreted so as to give uniform application to nation-wide scheme of taxation.
Mutual Fire Ins. Co. v United States (1944, CA3 Pa) 142 F2d 344, 44-1 USTC P
9299, 32 AFTR 649, cert den (1944) 323 US 729, 89 L Ed 585, 65 S Ct 65.
System of federal taxation was established by acts of Congress and was not affected
by state law or custom unless it was made applicable by federal enactments. Barnhill
v Commissioner (1945, CA4) 148 F2d 913, 45-1 USTC P 9260, 33 AFTR 1203, 159
ALR 1210.
102
State law controls only when operation of federal taxing act, by express language
and necessary implication, makes operation of act dependent on state law. Fulk &
Needham, Inc. v United States (1968, MD NC) 288 F Supp 39, 68-2 USTC P 9517,
22 AFTR 2d 5389, affd on other grounds (1969, CA4 NC) 411 F2d 1403, 69-2
USTC P 9452, 24 AFTR 2d 5215.
198. Corporate stock tax
State court's construction of act relating to consolidation of trust companies was not
binding on federal court determining applicability of federal taxing act to stock
issued by consolidated company. First Trust Co. v United States (1936, DC Minn)
15 F Supp 634, 36-2 USTC P 9365, 18 AFTR 305.
199. Estate tax
Whether, by testamentary exercise of general power of appointment, property passed
under federal estate tax statute was question of federal law, once state law had made
it clear that appointment had legal validity and had brought into being new interests
in property. Estate of Rogers v Commissioner (1943) 320 US 410, 88 L Ed 134, 64 S
Ct 172, 43-2 USTC P 10078, 31 AFTR 759.
Determination by state supreme court that stock would be included as part of estate
of deceased owner was binding on federal court in suit for refund of deficiency tax
imposed by commissioner of internal revenue because of omission of such stock
from return of estate tax. Dysart v United States (1938, CA8 Mo) 95 F2d 652, 38-1
USTC P 9202, 20 AFTR 1158, cert den (1938) 305 US 608, 83 L Ed 386, 59 S Ct
67, reh den (1938) 305 US 671, 83 L Ed 435, 59 S Ct 142, 21 AFTR 985.
Definition of "general power of appointment," within meaning of federal estate tax
statute requiring property passing under general power of appointment to be
included in gross estate, was not dependent on state law but was matter of federal
law. Morgan v Commissioner (1939, CA7) 103 F2d 636, 39-1 USTC P 9487, 22
AFTR 1096, affd (1940) 309 US 78, 84 L Ed 585, 60 S Ct 424, 40-1 USTC P 9210,
23 AFTR 1046.
State court decree that legacies were for nongratuitous services was binding on board
of tax appeals in proceeding to determine estate tax deficiency, where services for
which legacies were performed and arrangement between testator and legatees was
made in state in which such decree was entered. Nashville Trust Co. v
Commissioner (1943, CA6) 136 F2d 148, 43-1 USTC P 10040, 31 AFTR 105.
Federal estate tax was tax upon estate as whole and was payable by executors, but
how its burden was to be apportioned as among beneficiaries of estate was question
to be determined by law of jurisdiction in which estate was being administered.
Rogan v Taylor (1943, CA9 Cal) 136 F2d 598, 43-1 USTC P 10052, 31 AFTR 214.
103
Order of state court that testator's widow, to whom he had left life estate without
limitation on expenditures by her but with remainders over to charities, did not have
power to invade corpus were binding on federal district court, so that charity
bequests were sufficiently ascertainable to warrant their deduction from gross estate
for estate tax purposes. Henricksen v Baker-Boyer Nat'l Bank (1944, CA9 Wash)
139 F2d 877, 44-1 USTC P 10083, 31 AFTR 1235.
Where testator left life estate to his wife with no limitation on any expenditures she
might make for any purpose, with remainder over in trust for charity, whether or not
charitable bequest was subject to federal estate tax if it should be determined that
wife could not invade corpus of trust was matter for federal courts to adjudicate.
Henricksen v Baker-Boyer Nat'l Bank (1944, CA9 Wash) 139 F2d 877, 44-1 USTC
P 10083, 31 AFTR 1235.
Federal courts, in applying provision of federal Estate Tax Law, permitting such
deductions as were allowed by laws of state in which estate was being administered,
were bound by decisions of supreme court of state. Title Guarantee & Trust Co. v
Edwards (1922, SD NY) 290 F 617, 2 AFTR 1984.
State supreme court's holding that certain shares of stock belonged to estate of
decedent was binding on federal court in action for refund of estate tax based on
ground that decedent's transfers of such stock were not intended to take effect at his
death. Dysart v United States (1936, ED Mo) 17 F Supp 924, 18 AFTR 1077, affd
(1938, CA8 Mo) 95 F2d 652, 38-1 USTC P 9202, 20 AFTR 1158, cert den (1938)
305 US 608, 83 L Ed 386, 59 S Ct 67, reh den (1938) 305 US 671, 83 L Ed 435, 59
S Ct 142, 21 AFTR 985.
200. Gift tax
Local law determined whether charitable trust had been created, but taxability of
state was not matter of local law, but turned on whether particular gift was within
exemption of federal statute. Sharpe's Estate v Commissioner (1945, CA3) 148 F2d
179, 45-1 USTC P 10185, 33 AFTR 906.
201. Income tax
Time of accrual of dividend declared, but not paid, during lifetime of stockholder, so
as to determine whether it was taxable as income to him or to his estate, was
governed by federal and not by state law. Estate of Putnam v Commissioner (1945)
324 US 393, 89 L Ed 1023, 65 S Ct 811, 45-1 USTC P 9234, 33 AFTR 599, 158
ALR 1426.
In view of laws of Washington under which income derived from husband's
professional services as architect was community property and considered as earned
by community, and husband and wife were permitted to make separate tax returns as
to their respective halves of community property, and in view of fact that provisions
104
of Revenue Act of 1928 relating to "earned income credit" did not define term
"actually rendered," as used therein, laws of Washington were controlling in
determining whether wife properly made her separate federal income tax return so as
to show her half of such income as "earned income," though not derived from her
own personal service. Graham v Commissioner (1938, CA9) 95 F2d 174, 38-1
USTC P 9172, 20 AFTR 1090.
Where federal statute in general terms fixed time of distribution of inherited property
as basic date for income tax purposes, Congress evidently contemplated that time of
distribution would be that which was recognized by state law. Williamson v
Commissioner (1938, CA6) 100 F2d 735, 13 Ohio Ops 493, 39-1 USTC P 9207, 22
AFTR 180, cert den (1939) 307 US 623, 83 L Ed 1501, 59 S Ct 827.
Construction placed by state courts upon trust instrument as to property rights of
trustee and beneficiary in income of trust estate was binding in determination of
liability for income tax. Commissioner v Dean (1939, CA10) 102 F2d 699, 39-1
USTC P 9364, 22 AFTR 945.
In construing federal income tax statute, technical distinctions of local laws were
disregarded, and statute was interpreted so as to apply uniformly. Hogan v
Commissioner (1944, CA5 Tex) 141 F2d 92, 44-1 USTC P 9217, 32 AFTR 246, cert
den (1944) 323 US 710, 89 L Ed 571, 65 S Ct 36.
Whether carrying charges on trust property were payable from corpus of trust or
from income was determined by local law. Commissioner v Lewis (1944, CA3) 141
F2d 221, 44-1 USTC P 9176, 32 AFTR 290.
Federal district court properly looked to general law rather than to local law in
determining whether taxpayer was mutual company within meaning of federal
income tax statute. Mutual Fire Ins. Co. v United States (1944, CA3 Pa) 142 F2d
344, 44-1 USTC P 9299, 32 AFTR 649, cert den (1944) 323 US 729, 89 L Ed 585,
65 S Ct 65.
Rules of decision laid down by state courts with regard to rules of property, or
statutes respecting same, while generally controlling upon federal courts, did not
govern in interpretation of income tax laws. Kieferdorf v Commissioner (1944,
CA9) 142 F2d 723, 44-1 USTC P 9323, 32 AFTR 728, cert den (1944) 323 US 733,
89 L Ed 588, 65 S Ct 69.
Whether lessor or his assignee was taxable for rent for income tax purposes
depended not upon local law, but whether rent comprised part of lessor's or
assignee's gross income under Internal Revenue Code. Lum v Commissioner (1945,
CA3) 147 F2d 356, 45-1 USTC P 9155, 33 AFTR 674.
Whether royalty payments of taxpayer were deductible for income tax purposes as
ordinary and necessary expenses was entirely issue of federal law. Thomas Flexible
105
Coupling Co. v Commissioner (1946, CA3) 158 F2d 828, 70 USPQ 515, 46-2 USTC
P 9347, 35 AFTR 606, cert den (1946) 329 US 810, 91 L Ed 691, 67 S Ct 624, 72
USPQ 529.
Taxpayer under federal income tax laws was not entitled to apply community
property laws of California to income derived from his services while temporarily
located there but retaining his domicil in another state. Shilkret v Helvering (1943,
App DC) 78 US App DC 178, 138 F2d 925, 43-2 USTC P 9619, 31 AFTR 866.
Federal income tax was exercise of plenary power of Congress and was given
uniform construction of nation-wide application, except insofar as Congress
expressly or by necessary implication made its operation dependent on state law.
Morss Hill Coal Co. v United States (1944, MD Pa) 54 F Supp 483, 44-1 USTC P
9267, 32 AFTR 614.
I.Torts
1.In General
202. Actions arising under federal liability acts
Federal common law rather than state law applies in Federal Employers' Liability
Act actions as to sufficiency of complaints or evidence, what questions must be
submitted to jury, applicability of res ipsa loquitur, and proximate cause. Brady v
Southern R. Co. (1943) 320 US 476, 88 L Ed 239, 64 S Ct 232 (criticized in Keranen
v AMTRAK (2000, Dist Col App) 743 A2d 703); Jesionowski v Boston & M.
Railroad (1947) 329 US 452, 91 L Ed 416, 67 S Ct 401, 169 ALR 947; Ellis v Union
P. R. Co. (1947) 329 US 649, 91 L Ed 572, 67 S Ct 598; Urie v Thompson (1949)
337 US 163, 93 L Ed 1282, 69 S Ct 1018, 11 ALR2d 252 (criticized in Polizzi v N.J.
Transit Rail Operations, Inc. (2003, App Div) 364 NJ Super 323, 835 A2d 1241);
Brown v Western R. of Alabama (1949) 338 US 294, 94 L Ed 100, 70 S Ct 105;
Dice v Akron, C. & Y. R. Co. (1952) 342 US 359, 96 L Ed 398, 72 S Ct 312, 47
Ohio Ops 53, 63 Ohio L Abs 161.
Federal common law rather than state law applies in Federal Employers' Liability
Act actions as to validity of releases. Dice v Akron, C. & Y. R. Co. (1952) 342 US
359, 96 L Ed 398, 72 S Ct 312, 47 Ohio Ops 53, 63 Ohio L Abs 161; Maynard v
Durham & S. R. Co. (1961) 365 US 160, 5 L Ed 2d 486, 81 S Ct 561.
Federal common law rather than state law applies in Federal Employers' Liability
Act actions as to necessity of tendering back before suit any consideration received
for release. Hogue v Southern R. Co. (1968) 390 US 516, 20 L Ed 2d 73, 88 S Ct
1150, 33 Cal Comp Cas 841.
Interpretation of Federal Employers' Liability Act by federal decisions was
controlling, and state court could not whittle down rights of either party thereunder
by application of state laws or decisions, notwithstanding decision of Erie Railroad
Co. v Tomplems. Mooney v Terminal R. Ass'n (1944) 352 Mo 245, 176 SW2d 605.
106
203. Damages
State statute concerning damages for wrongful death, and construction by state court
as including exemplary damages, were binding on federal court. Louisville & N. R.
Co. v Lansford (1900, CA5 Ala) 102 F 62.
In absence of state statute, allowance of exemplary damages in action for conspiracy
and deceit was matter of general law which federal courts determined for
themselves. Greene v Keithley (1936, CA8 Neb) 86 F2d 238.
28 USCS § 1652 requires that state court rule of civil procedure which provides for
pre-judgment interest in tort cases must be applied in diversity action brought in
federal district court in that state. Jarvis v Johnson (1982, CA3 Pa) 668 F2d 740.
204. Joint and several liability
In suit to recover damages for injuries sustained by being struck by truck operated
without proper equipment, and brought against driver of truck and against person
who had leased truck to driver's employer, upon ground that lessor was charged with
duty of maintaining truck in reasonably safe condition, court erred in treating
question of liability of lessor as one of general law instead of applying law of state in
which injury occurred. Hudson v Moonier (1938) 304 US 397, 82 L Ed 1422, 58 S
Ct 954.
Joinder of master and servant in action for tort was controlled by local law. Henry
W. Putnam Memorial Hospital v Allen (1929, CA2 Vt) 34 F2d 927.
Where oil drillers permitted crude oil and salt water to escape into stream, question
of joint or several liability was determined by law of state. Mosby v Manhattan Oil
Co. (1931, CA8 Mo) 52 F2d 364, 77 ALR 1099, cert den (1931) 284 US 677, 76 L
Ed 572, 52 S Ct 131.
Whether liability of nonresident railroad and its resident servants for crossing
accident was joint or several, under allegations of complaint, was determinable by
law of state on motion to remand. Huffman v Baldwin (1936, CA8 Ark) 82 F2d 5,
cert den (1936) 299 US 550, 81 L Ed 405, 57 S Ct 12; Nelson v Baldwin (1936, CA8
Ark) 82 F2d 8, cert den (1936) 299 US 550, 81 L Ed 405, 57 S Ct 12.
Existence of cause of action for negligence and whether liability was joint or several
was decided by law of state where action was brought in determining if it was
removable to federal court. Donaldson v Tucson Gas, Electric Light & P. Co. (1935,
DC Ariz) 14 F Supp 246.
In California, question of joint liability of defendants sued for negligence was matter
of state statute law on which federal court followed decisions of state's highest court.
Dwinelle v Union P. R. Co. (1936, DC Colo) 16 F Supp 891.
107
In personal injury action in state court against railroad company and its engineer to
recover for injuries sustained, question whether liability was joint or several, as
bearing on removability of cause to federal court, was determinable under state law.
Harrod v Missouri P. R. Co. (1939, DC Ark) 26 F Supp 619.
205. Law of place where wrong occurred
Law of place where alleged tort was committed was controlling as to existence and
extent of legal liability. Slater v Mexican Nat'l R. Co. (1904) 194 US 120, 48 L Ed
900, 24 S Ct 581 (criticized in Tramontana v S. A. Empresa De Viacao Aerea Rio
Grandense (1965, App DC) 121 US App DC 338, 350 F2d 468); Cuba R. Co. v
Crosby (1912) 222 US 473, 56 L Ed 274, 32 S Ct 132; Young v Masci (1933) 289
US 253, 77 L Ed 1158, 53 S Ct 599, 88 ALR 170.
Ordinarily in tort cases, in which jurisdiction of federal court rests on diversity of
citizenship, they will follow law of place where tort was committed. Boston & M. R.
R. v Breslin (1935, CA1 NH) 80 F2d 749, 103 ALR 695, cert den (1936) 297 US
715, 80 L Ed 1000, 56 S Ct 590.
In determining what law was applicable in cases where defendant's conduct occurred
in one state and injury was done in another, place of wrong, the locus delicti, which
governed right of action, was taken by courts in this country to be state where last
event necessary to make actor liable occurred. Hunter v Derby Foods, Inc. (1940,
CA2 NY) 110 F2d 970, 17 Ohio Ops 384, 133 ALR 255.
Where Missouri law forbade administrator to sue for wrongful death, action would
not lie in federal court if death occurred in that state, but it was otherwise where
death occurred in Illinois and law of that state permitted such action. Richter v East
St. Louis & S. R. Co. (1927, DC Mo) 20 F2d 220.
In suit brought in federal court because of diversity of citizenship and to recover for
injuries sustained by reason of alleged negligence of defendant in automobile
collision, law of state in which accident occurred was applicable. Schopp v Muller
Dairies, Inc. (1938, DC NY) 25 F Supp 50.
Under Rules of Decision Act (28 USCS § 1652) Federal District Court in Ohio must
apply whatever law Ohio court would apply; Ohio has abandoned old lex loci delicti
rule in tort cases and employs instead more modern balancing of interests approach;
in Indiana resident's suit filed in Federal District Court in Ohio for injuries sustained
when his automobile was struck by Ohio citizen's car, in which Indiana hospital was
made third party defendant by Ohio citizen, and in which Indiana resident was later
permitted to file claim directly against Indiana hospital, for allegedly failing to
provide restraints for plaintiff and to supervise him adequately resulting in his fall
from hospital bed, mere fact that negligence, if any, of Indiana hospital took place in
Indiana is not controlling. Saalfrank v O'Daniel (1974, ND Ohio) 390 F Supp 45, 20
108
FR Serv 2d 804, revd on other grounds (1976, CA6 Ohio) 533 F2d 325, 21 FR Serv
2d 659, cert den (1976) 429 US 922, 50 L Ed 2d 289, 97 S Ct 319.
206.--Conflicting decisions
Where federal district court held that joint recovery could not be had against original
defendant for damage caused in automobile collision and additional defendant
brought in, such judgment would be reversed on appeal where in meantime state
supreme court held that such recovery could be had, though there was conflict in
decisions of state courts on that subject, since latest decision of highest state court
were followed in the federal courts. Abraham v National Biscuit Co. (1937, CA3 Pa)
89 F2d 266, 111 ALR 1313.
207.--State decisions in absence of statutes
In matters of general jurisprudence, federal courts would apply unwritten or common
law of state as declared by highest court of particular state. Erie R.R. v Tompkins
(1938) 304 US 64, 82 L Ed 1188, 58 S Ct 817, 11 Ohio Ops 246, 114 ALR 1487
(superseded by statute as stated in Chapman & Cole v Itel Container Int'l B.V.
(1989, CA5 Tex) 865 F2d 676, 13 FR Serv 3d 124) and (superseded by statute as
stated in Wray v Gregory (1995, CA9 Nev) 61 F3d 1414, 95 CDOS 6117, 95 Daily
Journal DAR 10464).
208. Release
Question whether court was authorized as matter of law to set aside release from
liability for negligent injury, on ground of mutual mistake, was determinable by state
law. Tulsa City Lines, Inc. v Mains (1939, CA10 Okla) 107 F2d 377.
209. Torts arising in master-servant or employer-employee relationship
Whether any case under Federal Employers' Liability Act was pending in state courts
was determined by state law; but, freedom of state courts to pass on such question
was subject to qualification that cause of action would not be discriminated against
because it was federal one; in instant case, there was no such discrimination. Herb v
Pitcairn (1945) 325 US 77, 89 L Ed 1483, 65 S Ct 954, reh den (1945) 325 US 893,
89 L Ed 2005, 65 S Ct 1188.
State statutes concerning right of servant to recover for injuries caused by fellow
servant were binding on federal court. Peirce v Van Dusen (1897, CA6 Ohio) 78 F
693; Texas & P. R. Co. v Carlin (1901, CA5 Tex) 111 F 777, affd (1903) 189 US
354, 47 L Ed 849, 23 S Ct 585.
Liability of telegraph company for injuries to pedestrian by being struck by bicycle
operated by messenger boy was governed by applicable state law. Western Union
Tel. Co. v Kirby (1930, CA3 Pa) 37 F2d 480.
109
In determining whether employee's complaint against employer, based on
occupational disease, stated action at common law, federal court would follow
decisions of state supreme court. McGuire v Sherwin-Williams Co. (1936, CA7 Ill)
87 F2d 112.
In determining in federal court whether or not, as between master and his servant,
maxim "res ipsa loquitur" was applicable, state law governed. F. W. Martin & Co. v
Cobb (1940, CA8 Ark) 110 F2d 159.
Action under Federal Employers' Liability Act and Safety Appliance Act rested on
asserted rights granted by federal laws which required uniform interpretation, so that
local law was inapplicable. Whitmarsh v Pennsylvania R. Co. (1945, DC Pa) 61 F
Supp 850.
210. Torts occurring on navigable waters
State tort law applied to torts committed on navigable water within state, except
where displaced by federal statutes or admiralty law. The Bart Tully (1918, CA6
Tenn) 251 F 856.
2.Particular Matters
211. Generally
Federal government's tort claim against private party was controlled by federal
common law rather than by state law. United States v Standard Oil Co. (1947) 332
US 301, 91 L Ed 2067, 67 S Ct 1604 (superseded by statute as stated in United
States v Merrigan (1968, CA3 NJ) 389 F2d 21, 7 ALR Fed 279) and (superseded by
statute as stated in United States v Thomas Jefferson Corp. (1970, WD Va) 309 F
Supp 1246) and (superseded by statute as stated in McCullough v Seamans (1972,
ED Cal) 348 F Supp 511) and (superseded by statute as stated in United States v
Trammel (1990, CA6 Ky) 899 F2d 1483) and (superseded by statute as stated in
Piquette v Stevens (1999) 128 Md App 590, 739 A2d 905) and (superseded by
statute as stated in United States v Philip Morris Inc. (2000, DC Dist Col) 116 F
Supp 2d 131, 2000 Daily Journal DAR 10757, RICO Bus Disp Guide (CCH) P
9946).
Federal common law is controlling as to liability of federal government officials for
certain allegedly tortious conduct. Howard v Lyons (1959) 360 US 593, 3 L Ed 2d
1454, 79 S Ct 1331, reh den (1959) 361 US 854, 4 L Ed 2d 93, 80 S Ct 40; Bivens v
Six Unknown Named Agents of Federal Bureau of Narcotics (1971) 403 US 388, 29
L Ed 2d 619, 91 S Ct 1999 (superseded by statute as stated in Wishart v Agents for
Int'l Monetary Fund, IRS (1995, ND Cal) 76 AFTR 2d 7429, 95 TNT 224-14).
Where federal jurisdiction was based upon diversity of citizenship, question as to
whether conduct of defendant was tortious was matter of state law. Gum, Inc. v
Gumakers of America, Inc. (1943, CA3 Pa) 136 F2d 957, 58 USPQ 453.
110
212. Assault and battery
State law was applied in bankruptcy proceeding to determine whether judgment in
action for assault involved willful and malicious injury. In re De Lauro (1932, DC
Conn) 1 F Supp 678.
Decisions of Oregon courts were held to justify verdict for damages for assault and
battery committed upon plaintiff by special agent of telegraph and telephone
company. White v Pacific Tel. & Tel. Co. (1938, DC Or) 24 F Supp 871.
213. Failure to maintain safe premises
Question of negligence with respect to patron injured at amusement park was
governed by law of state where injury occurred. Kehoe v Central Park Amusement
Co. (1931, CA3 Pa) 52 F2d 916.
Decisions of state court involving rights and duties of owner and proprietor of store
with respect to his patrons was followed by federal court in suit for injuries sustained
by patron. Randolph v Great Atlantic & Pacific Tea Co. (1932, DC Pa) 2 F Supp
462, affd (1933, CA3 Pa) 64 F2d 247.
In action in federal court in New Hampshire against railroad company for injuries
sustained by eight-year-old child in Massachusetts while trespassing on defendant's
turntable, where jurisdiction rested on diversity of citizenship, question of liability of
defendant was to be determined by decisions of courts of Massachusetts. McCabe v
American Woolen Co. (1903, CCD Mass) 124 F 283, affd (1904, CA1 Mass) 132 F
1006; Tashjian v Boston & M. Railroad (1935, CA1 NH) 80 F2d 320; Boston & M.
R. R. v Breslin (1935, CA1 NH) 80 F2d 749, 103 ALR 695, cert den (1936) 297 US
715, 80 L Ed 1000, 56 S Ct 590; Daniels v New York & N. E. R. Co. (1891) 154
Mass 349, 28 NE 283; Grant v Fitchburg (1893) 160 Mass 16, 35 NE 84.
214. Libel and slander
In action of slander brought in federal court, general rule of qualified privilege,
stated by supreme court of the state, was applied in determination of controversy.
Lee v Cannon Mills Co. (1939, CA4 NC) 107 F2d 109.
215. Medical malpractice
Indiana Medical Malpractice Act of 1975 is applicable in Indiana federal courts
exercising jurisdiction under diversity of citizenship, such application in federal
district court of Indiana neither detracting from independence of federal judicial
systems nor disrupting federal system of allocating functions between judge and
jury. Hines v Elkhart General Hospital (1979, CA7 Ind) 603 F2d 646.
111
District Court properly dismissed diversity action brought against hospital to recover
losses sustained by plaintiff as result of failure of hospital to provide proper health
care where plaintiffs had failed to comply with applicable state law requiring that
they first submit their claim to state administered arbitration process since 28 USCS
§ 1652 requires federal court to apply state law in order to prevent inequities in
treatment of plaintiffs in state and federal courts and to further state legislature's
legitimate goals. Stoner v Presbyterian University Hospital (1979, CA3 Pa) 609 F2d
109.
Provision of state tort claims act to effect that no suit shall be permitted unless state
appeal board has made full disposition of claim, inter alia, is applicable to diversity
action alleging medical malpractice by physicians employed by state university
hospital. White v Lavigne (1984, CA8 Iowa) 741 F2d 229.
In action alleging medical malpractice, motion of defendant hospital to refer matter
to arbitration pursuant to state statute is granted and mandatory language contained
in state statute is binding upon Federal District Court under 28 USCS § 1652 since
state statute does not require any action by any state court and is therefore
substantive rather than procedural in nature. Sander v Providence Hospital (1979,
SD Ohio) 483 F Supp 895, 13 Ohio Ops 3d 315.
Pre-litigation notice requirement of Maine Health Security Act is intimately bound
up with rights and obligations of parties to Maine medical malpractice claims and
therefore must be applied in diversity action, notwithstanding that it does not
mandate arbitration or panel review. Houk v Furman (1985, DC Me) 613 F Supp
1022.
In patient's malpractice action against psychiatrist, state statute requiring that patient
obtain written opinion of health-care provider that defendant failed to use care of
reasonably prudent provider will apply, where no federal rule conflicts with statute,
because failure to apply it would encourage forum shopping and promote inequitable
administration of laws. Hill v Morrison (1994, WD Mo) 870 F Supp 978 (criticized
in Serocki v Meritcare Health Sys. (2004, SD) 2004 DSD 3, 312 F Supp 2d 1201).
216. Motor vehicle accidents
In determining negligence in automobile collision case, federal court followed state
statutes dealing with law of road. Hewlett v Schadel (1934, CA4 Va) 68 F2d 502, 91
ALR 743.
State court's construction of statute governing speed of automobiles was binding on
federal court. Booth v Gilbert (1935, CA8 Mo) 79 F2d 790.
On appeal from judgment for defendant in action for injury sustained by four year
old boy beneath wheel of truck, court of appeals was bound to apply substantial law
112
of state as interpreted by highest court of state. Abbott v Railway Express Agency
(1940, CA4 Md) 108 F2d 671.
In action in federal district court in Texas to recover damages growing out of
automobile collision in Louisiana wherein federal jurisdiction was based solely upon
diversity of citizenship, so far as state law was substantive, federal court was
controlled by statutes and decisions of Louisiana and so far as it was procedural it
was guided by law of Texas, since there was nothing to contrary in federal statutes or
Federal Rules of Civil Procedure. Wells v American Employers' Ins. Co. (1942, CA5
Tex) 132 F2d 316.
Law of state where collision occurs must be applied in wrongful death action arising
out of motor vehicle collision. Capital Transp. Co. v Compton (1951, CA8 Ark) 187
F2d 844; Callander v Hunter Motor Lines, Inc. (1964, CA4 Va) 327 F2d 754.
Court determined that it should apply Wyo. Stat. Ann. § 31-5-1402(f), which
prohibited introduction of evidence of seat belt nonuse, in plaintiff's action against
defendant, and therefore granted plaintiff's motion in limine; court determined that §
31-5-1402(f) was substantive state law as legislative intent was to bar admission of
evidence of nonuse of safety belt in any civil action, and in doing so, legislature
impliedly advanced substantive principle that seat belt nonuse could not be used to
establish comparative fault; therefore, standing alone, § 31-5-1402(f) had
nonprocedural purpose. Huff v Shumate (2004, DC Wyo) 360 F Supp 2d 1197.
217. Negligence, generally
In suit in federal district court against trustee in reorganization of railway company
to recover damages for death of guest passenger in automobile resulting from
collision between automobile and freight car standing upon grade crossing,
controlling law in determining whether, under evidence, there was actionable
negligence in connection with blocking of crossing with freight train was that of
state. Thomson v Stevens (1939, CA8 Iowa) 106 F2d 739.
Where suit against manufacturer was to recover damages for personal injuries, and
was removed from state court to federal court, at instance of defendant, and because
of diversity of citizenship, primary issue of liability was dependent upon law of
state. De Lape v Liggett & Myers Tobacco Co. (1939, DC Cal) 25 F Supp 1006,
mod (1940, CA9 Cal) 109 F2d 598.
218.--Defenses
In action by passenger against carrier for injury sustained on Sunday, federal court
applied state statute prohibiting traveling on Sunday, and held, in accordance with
decisions of state court, that statute prevented recovery. Bucher v Cheshire R. Co.
(1888) 125 US 555, 31 L Ed 795, 8 S Ct 974; Baltimore & O. R. Co. v Baugh (1893)
149 US 368, 37 L Ed 772, 13 S Ct 914.
113
State abolishing defense of assumption of risk, and construction thereof by highest
state court, was binding. Columbia Box Co. v Saucier (1914, CA8 Mo) 213 F 310;
National Enameling & Stamping Co. v Zirkovics (1918, CA8 Mo) 251 F 184.
State statute requiring negligence and contributory negligence to be submitted to
jury was not binding in federal court, but it was otherwise as to statute providing that
contributory negligence did not bar recovery, but merely diminished damages.
Mississippi Power & Light Co. v Whitescarver (1934, CA5 Miss) 68 F2d 928.
Decisions under California community property law holding that wife had no control
over property were applied to show that son's contributory negligence in automobile
accident in Oregon could not be attributed to mother. Harris v Traglio (1938, DC Or)
24 F Supp 402, affd (1939, CA9 Or) 104 F2d 439, 127 ALR 803, cert den (1939)
308 US 629, 84 L Ed 524, 60 S Ct 125.
219.--Proof
Decision that violation of certain statute in operation of automobile was negligence
per se was binding on federal court. Harmon v Barber (1918, CA6 Ohio) 247 F 1, 17
Ohiolr 109, cert den (1918) 246 US 666, 62 L Ed 929, 38 S Ct 335.
In holding that disregard of signals of officer at street intersection was "of itself
evidence of negligence," federal court held that it was bound by decisions of state
court. Railway Express Agency, Inc. v Little (1931, CA3 Pa) 50 F2d 59, 75 ALR
963.
Question whether failure to prove negligence under each count submitted to jury was
fatal error was one of practice or procedure, in which statute or decision of state
court had to be followed by federal court. Stephenson v Grand T. W. R. Co. (1940,
CA7 Ill) 110 F2d 401, 132 ALR 455, cert dismd (1940) 311 US 720, 85 L Ed 469,
60 S Ct 1107.
In action brought in federal district court in Massachusetts for injuries sustained in
automobile collision in Maine, there being requisite diversity of citizenship, burden
of proving contributory negligence on part of plaintiff was on defendant, in
accordance with Massachusetts rule, and not on plaintiff in accordance with Maine
law. Sampson v Channell (1940, CA1 Mass) 110 F2d 754, 128 ALR 394, cert den
(1940) 310 US 650, 84 L Ed 1415, 60 S Ct 1099.
220.--Standard of care required
Where there was collision between street car and plaintiff's buggy, decisions of state
court were persuasive in determining degree of care required of plaintiff on
approaching defendant's tracks. Milford & U. Street R. Co. v Cline (1907, CA1
Mass) 150 F 325.
114
Law of state as to duty of person crossing railroad track applied in federal court.
Perucca v Baltimore & O. R. Co. (1929, CA3 Pa) 35 F2d 113, cert den (1930) 281
US 721, 74 L Ed 1139, 50 S Ct 236.
Federal court followed state law in determining whether violation of standard of care
defined by statute was negligence per se. Sheehan v Nims (1935, CA2 Vt) 75 F2d
293.
221. Nuisance
Right to recover for nuisance was determined by law of state. Sullivan v American
Mfg. Co. (1929, CA4 SC) 33 F2d 690.
State statute defining nuisance was controlling in federal court. Cities Service Oil
Co. v Roberts (1933, CA10 Okla) 62 F2d 579.
222. Wrongful death
State statutes giving right of action for death, and their construction by state courts,
were controlling in federal courts. Mann v Minnesota Electric Light & Power Co.
(1930, CA10 Okla) 43 F2d 36.
Federal court of admiralty had jurisdiction of action for death of longshoreman
aboard ship, though recovery was sought under Oregon death statute. The City of
Vancouver (1932, CA9 Or) 60 F2d 793, affd (1933) 288 US 445, 77 L Ed 885, 53 S
Ct 420.
State statute providing that no action would be brought or prosecuted in state to
recover damages for death occurring outside of state did not preclude federal court
from taking jurisdiction of such action in that state. Stephenson v Grand T. W. R.
Co. (1940, CA7 Ill) 110 F2d 401, 132 ALR 455, cert dismd (1940) 311 US 720, 85
L Ed 469, 60 S Ct 1107.
In action for death of plaintiff's decedent as result of crossing collision which
occurred in Minnesota, applicable substantive law was that of Minnesota. Roth v
Swanson (1944, CA8 Minn) 145 F2d 262.
Where wrongful death statute of Illinois provided that suit could not be filed in
Illinois, if death occurred outside state and in state where recovery was allowed for
wrongful death, federal district court of Illinois did not have jurisdiction where
wrongful act causing death occurred in Indiana where there was statute providing for
wrongful death action, even though plaintiff's decedent, resident of Illinois, died in
Ohio. Trust Co. of Chicago v Pennsylvania R. Co. (1950, CA7 Ill) 183 F2d 640, 21
ALR2d 238.
115
Rules of Decision Act (28 USCS § 1652) and supremacy clause of Federal
Constitution require that Federal Rules of Evidence govern in diversity action for
wrongful death arising out of air crash disaster. In re Air Crash Disaster near
Chicago (1983, CA7 Ill) 701 F2d 1189, 12 Fed Rules Evid Serv 914, cert den (1983)
464 US 866, 78 L Ed 2d 178, 104 S Ct 204.
Illinois statute precluding recovery in that state for death occurring outside state did
not preclude action in federal court based on foreign statute giving right of action for
death. Swett v Givner (1934, DC Ill) 5 F Supp 739.
Suit based on Virginia death statute could be maintained in federal district court
located in Maryland, where question involved was one of general law, although
Maryland court of appeals had held that similar statutes of other states are so
dissimilar from Maryland statute as not to be enforceable by Maryland state courts
as matter of comity. Rose v Phillips Packing Co. (1937, DC Md) 21 F Supp 485.
Where death occurred in Connecticut and suit was brought in Vermont, and statute
of Connecticut required notice of claim within four months, declaration was not bad
for failure to allege such notice. Brown v New York, N. H. & H. R. Co. (1905, CCD
Vt) 136 F 700.
223. Other
State court's construction of statute creating presumption against railroad company
causing fire was followed in federal courts. Turner Simplicity Mfg. Co. v Bremner
(1930, CA8 Iowa) 40 F2d 368.
In diversity action brought in Mississippi District Court by former shipyard worker
against asbestos manufacturers to recover compensatory and punitive damages under
strict liability theory for injuries sustained as result of exposure to asbestos products,
state law of Mississippi is controlling. Jackson v Johns-Manville Sales Corp. (1986,
CA5 Miss) 781 F2d 394, CCH Prod Liab Rep P 10893, cert den (1986) 478 US
1022, 92 L Ed 2d 743, 106 S Ct 3339.
J.Wills, Trusts and Estates
1.Wills
224. Generally
It was duty of federal court to follow adjudication of state court in dealing with
assets of estate in that state, under provisions of will of citizen of that state, by virtue
of trust which was being administered in that state. Long v Rike (1931, CA7 Ill) 50
F2d 124, 81 ALR 521, cert den (1931) 284 US 657, 76 L Ed 557, 52 S Ct 35.
Estate and trusts set up in will were governed by law of state in which testator died
resident and in which will was probated. Colt v Duggan (1938, SD NY) 25 F Supp
268, 38-2 USTC P 9501, 21 AFTR 1098.
116
225. Construction
Where construction of will by state courts had been established as rule of property, it
was binding in federal courts. Lane v Vick (1845) 44 US 464, 3 How 464, 11 L Ed
681.
State law rather than federal common law governs as to construction of wills. Evans
v Abney (1970) 396 US 435, 24 L Ed 2d 634, 90 S Ct 628.
Will had to be construed in accordance with statutes and decisions of state court.
President & Fellows of Harvard College v Jewett (1925, CA6 Ohio) 11 F2d 119;
Smith v Sweetser (1927, CA7 Ind) 19 F2d 974; Hidden v Durey (1929, ND NY) 34
F2d 174, 7 AFTR 9286.
Judgment construing will was binding on federal court in same state, irrespective of
parties and res judicata, property involved being located in that state. Sutherland v
Selling (1926, CA9 Or) 16 F2d 865, cert den (1927) 273 US 760, 71 L Ed 878, 47 S
Ct 475.
Decisions of state courts determining meaning of terms frequently used in wills were
given great, if not controlling, weight in federal courts. O'Neil v Dreier (1932, CA9
Hawaii) 61 F2d 598.
Terms of will of testator who died domiciled in Delaware were construed in
accordance with laws of Delaware. Faircloth v McClister (1937, CA3 Pa) 91 F2d
683.
Judicial construction of will by state court determined not only legally but practically
extent and character of interests taken by legatees, and by it federal court was bound.
Sharpe v Commissioner (1939, CA3) 107 F2d 13, 39-2 USTC P 9736, 23 AFTR
846, cert den (1940) 309 US 665, 84 L Ed 1013, 60 S Ct 591.
State decisions controlled on validity of exercise of power of appointment under
will. Parker v MacBryde (1942, CA4 Md) 132 F2d 932, cert den (1943) 318 US 779,
87 L Ed 1147, 63 S Ct 859.
In federal estate tax cases, decisions of state courts were binding with respect to
meaning and effect of will. Henricksen v Baker-Boyer Nat'l Bank (1944, CA9 Wash)
139 F2d 877, 44-1 USTC P 10083, 31 AFTR 1235.
Where construction of will by highest state court had been so long acquiesced in as
to become rule of property, it was rule of decision for federal courts. Flora v
Anderson (1895, CCD Ohio) 67 F 182.
Federal courts adopted local law of real property, as ascertained by decisions of state
courts, whether grounded on construction of statutes or unwritten law of state,
117
including that pertaining to construction of wills. Russell v United States Trust Co.
(1904, CCD NY) 127 F 445, affd (1905, CA2 NY) 136 F 758.
226. Contest
Right to contest will was dependent on statute, and state law governed in federal
court. Berg v Merchant (1926, CA6 Ohio) 15 F2d 990, reh den (1927, CA6) 16 F2d
1013, cert den (1927) 274 US 738, 71 L Ed 1317, 47 S Ct 575.
Statutory construction of highest court of state that will contest had to be made up
and tried in same court in which will was probated was binding on federal court. In
re Armistead's Estate (1933, DC Miss) 4 F Supp 606.
227. Execution
Rule at common law governed in Oklahoma in respect of competency of person to
act as attesting witness to execution of will. Caesar v Burgess (1939, CA10 Okla)
103 F2d 503.
228. Probate
Federal courts were bound by decisions of state courts upon probate of wills. Hidden
v Durey (1929, ND NY) 34 F2d 174, 7 AFTR 9286.
Federal court enforced remedies given by state law relating to probate of will in
administering rights of citizens of other states. Dallas Bank & Trust Co. v Holloway
(1931, DC Tex) 50 F2d 197.
State law giving persons right to challenge probate of will, in equity, was enforced
by federal courts. O'Brien v Markham (1936, DC Cal) 17 F Supp 633.
2.Trusts and Trustees
229. Generally
Whether American rule should be applied to equitable interests under trust was local
rule of property binding on federal courts. Jones v Harrison (1925, CA8 Mo) 7 F2d
461, cert den (1926) 270 US 652, 70 L Ed 781, 46 S Ct 351.
Whether trust agreement created under Missouri laws was void under rule against
perpetuities, had to be determined by Missouri laws. Blackhurst v Johnson (1934,
CA8 Mo) 72 F2d 644.
Decisions of highest court of state controlled as to creation of trusts in real estate and
as to meaning of language used in conveying such real estate. Eisel v Miller (1936,
CA8 Mo) 84 F2d 174.
118
Whether particular future estate arising out of trust was property which would pass
to trustee as asset of bankrupt depended upon law of state where trust was created
and was being administered, and in which res was situated. Horton v Moore (1940,
CA6 Mich) 110 F2d 189, cert den (1940) 311 US 692, 85 L Ed 448, 61 S Ct 75, reh
den (1940) 311 US 728, 85 L Ed 474, 61 S Ct 173.
State law governed rights of parties where trust funds were commingled. MacBryde
v Burnett (1942, CA4 Md) 132 F2d 898.
230. Assignment of beneficial interest
Court of appeals' judgment that income from trust assigned by beneficiary was
taxable to him, based on ground that it was spendthrift trust under local law, was not
res judicata as to beneficiary's liability for tax on assigned income in subsequent
years in view of supervening decision of state court construing trust as not
spendthrift trust. Blair v Commissioner (1937) 300 US 5, 81 L Ed 465, 57 S Ct 330,
37-1 USTC P 9083, 18 AFTR 1132.
Question of validity of assignments of interest in testamentary trust was one of local
law, and decisions of state court on question were final. Blair v Commissioner
(1937) 300 US 5, 81 L Ed 465, 57 S Ct 330, 37-1 USTC P 9083, 18 AFTR 1132.
Federal court in determining right of beneficiary to alienate income from spendthrift
trust was bound by decisions of state court as to validity and construction of such
trust. King v United States (1935, DC Mass) 12 F Supp 614, 35-2 USTC P 9635, 16
AFTR 1201, affd (1936, CA1 Mass) 84 F2d 156, 36-2 USTC P 9308, 17 AFTR
1262.
231. Charitable trusts
Validity of charitable trust was determined by state law. Gossett v Swinney (1931,
CA8 Mo) 53 F2d 772, cert den (1932) 286 US 545, 76 L Ed 1282, 52 S Ct 497.
Validity of charitable trusts was determined by laws of state of testator's residence.
Chicago Bank of Commerce v McPherson (1932, CA6 Mich) 62 F2d 393, cert den
(1933) 289 US 736, 77 L Ed 1484, 53 S Ct 596.
232. Testamentary trusts
Where transfer in trust was to take effect in possession or enjoyment at or after
trustor's death, determination by courts of state of trustor's residence of kind of
interest transferred and time when it was effected was matter of local law and
binding on United States Supreme Court. Central Hanover Bank & Trust Co. v Kelly
(1943) 319 US 94, 87 L Ed 1282, 63 S Ct 945.
119
Decision of highest court of state was binding upon court of appeals as to capacity of
testamentary trustees to purchase shares of national bank stock and to hold them.
Mitchell v Ottinger (1939, CA3 Pa) 105 F2d 334, cert den (1939) 308 US 591, 84 L
Ed 495, 60 S Ct 121.
233. Trust receipts and deeds
Construction, operation, and effect of trust deed were to be determined by law of
state. Hummer R. Co. v Huffman Const. Co. (1933, CA7 Ill) 63 F2d 372.
Law of state where trust receipt was executed was controlling as to its interpretation
and validity. People's Loan & Inv. Co. v Universal Credit Co. (1935, CA8 Ark) 75
F2d 545.
3.Decedent's Estates
234. Generally
Decision of state court as to what constituted perpetuity would be followed by
federal courts, though there was but single decision on subject. Hawks v Hamill
(1933) 288 US 52, 77 L Ed 610, 53 S Ct 240.
Principle that jurisdiction of courts of United States could not be defeated by state's
laws limiting redress of its own citizens to certain tribunals did not create such
inconsistency or conflict as to require overriding of law of state with respect to
distribution of estate of decedent. Pufahl v Estate of Parks (1936) 299 US 217, 81 L
Ed 133, 57 S Ct 151.
In suit for equitable relief in regard to property left by decedent who was citizen of
Illinois at time of his death, federal district court was bound by law of Illinois, and it
possessed no greater chancery powers to supersede jurisdiction of state probate court
over case than those of several state chancery courts. Price v Block (1941, CA7 Ill)
124 F2d 738, 52 USPQ 7.
235. Claims against estate
Where receiver of national bank, instead of suing in federal court as he had right to
do, prosecuted his claim for stockholder's liability in state court against decedent's
estate, in absence of act of Congress to contrary, litigation was governed by common
and statutory law of state; and local statute of limitations applied; and local law as to
extinguishment of estate and liability vel non of distributees controlled. Pufahl v
Estate of Parks (1936) 299 US 217, 81 L Ed 133, 57 S Ct 151.
Federal equity court could not relieve claimant against estate from his failure to
comply with nonclaim statute of state of decedent's domicile unless there was statute
permitting action against personal representative. Certain-Teed Products Corp. v
Luke (1934, CA9 Ariz) 74 F2d 384.
120
Whether foreign executor was subject to suit in federal court in Virginia was to be
determined by Virginia law. Sylvania Industrial Corp. v Lilienfeld's Estate (1943,
CA4 Va) 132 F2d 887, 145 ALR 612 (superseded by statute as stated in Crosson v
Conlee (1984, CA4 Va) 745 F2d 896).
In regard to creditors administration of assets of deceased persons was governed
altogether by law of country where executor or administrator acted, and from which
he derived his authority to collect them, and not by that of domicil of deceased.
Duehay v Acacia Mut. Life Ins. Co. (1939) 70 App DC 245, 105 F2d 768, 124 ALR
1268.
236.--Time for presentment
State statute limiting time within which claims against decedent's estate had to be
presented to probate court was applied in federal courts. Schurmeier v Connecticut
Mut. L. Ins. Co. (1903, CA8 Minn) 124 F 865; Schurmeier v Connecticut Mut. Life
Ins. Co. (1909, CA8 Minn) 171 F 1, cert dismd (1911) 219 US 586, 55 L Ed 347, 31
S Ct 470.
Massachusetts statute prohibiting suit against personal representative within first six
months of his appointment was not applicable to summary jurisdiction of bankruptcy
court to determine adverse claim against property in possession of court. Mitchell v
Mitchell (1932, CA1 Mass) 59 F2d 62.
Suit in equity against administratrix of deceased director of national bank to enforce
liability under 12 USCS § 93 could be maintained in federal court, though time for
presentation of claims under state statute had expired. Orth v Mehlhouse (1929, DC
Minn) 36 F2d 367.
237. Distribution and descent
Descent of property of intestate as determined by state court was binding on federal
courts. McPherson v Mississippi Valley Trust Co. (1903, CA8 Mo) 122 F 367; In re
Klien (1934, DC Minn) 9 F Supp 57.
Federal courts were bound by law of state courts with regard to following assets of
estate into hands of distributees. Hart v Burke (1939, DC Pa) 25 F Supp 945, affd
(1939, CA3 Pa) 108 F2d 82.
238.--Dower
Decision of state court concerning dower rights when conveyance containing release
of dower was set aside as fraudulent was followed. Wilson v Robinson (1936, CA2
NY) 83 F2d 397, cert dismd (1936) 299 US 616, 81 L Ed 455, 57 S Ct 717.
239.--Indians
121
Conflicting state decisions as to right of Indians to inherit under federal statutes was
held to have no controlling effect in federal courts. Knight v Carter Oil Co. (1927,
CA8 Okla) 23 F2d 481.
Adoption by Congress of laws of Oklahoma as governing descent of Indian lands did
not make such laws federal statutes, and state court decisions construing them
controlled in federal courts. Jackson v Harris (1930, CA10 Okla) 43 F2d 513.
240. Powers, duties and liabilities of administrator or executor
State court's judgment determining extent of control over property of administrator
de bonis non was binding on federal courts. White v Warburton (1903, CA9 Wash)
122 F 911.
241.--Liability after discharge
Local laws controlled as to liability of discharged executors. Hulburd v
Commissioner (1935) 296 US 300, 80 L Ed 242, 56 S Ct 197, 36-1 USTC P 9011,
35-2 USTC P 9657, 16 AFTR 1129.
242.--Sale of property
State court's construction of statute that petition of administrator to sell real estate of
deceased person for benefit of creditors was "adversary proceeding" was controlling
on federal court. Pfister v Johnson (1936, DC Okla) 13 F Supp 662.
K.Miscellaneous Subjects and Proceedings
243. Antitrust
Federal rather than state law governs as to claims or defenses based on violation of
federal antitrust laws. Sola Electric Co. v Jefferson Electric Co. (1942) 317 US 173,
87 L Ed 165, 63 S Ct 172, 55 USPQ 379; Partmar Corp. v Paramount Pictures
Theatres Corp. (1954) 347 US 89, 98 L Ed 532, 74 S Ct 414, reh den (1954) 347 US
931, 98 L Ed 1083, 74 S Ct 527; Kelly v Kosuga (1959) 358 US 516, 3 L Ed 2d 475,
79 S Ct 429, reh den (1959) 359 US 962, 3 L Ed 2d 769, 79 S Ct 796.
How far patentee could go in price fixing was federal question, to be resolved by
decisions of federal courts. Cummer-Graham Co. v Straight Side Basket Corp.
(1944, CA5 Tex) 142 F2d 646, 61 USPQ 395, cert den (1944) 323 US 726, 89 L Ed
583, 65 S Ct 60, 63 USPQ 358.
244. Civil rights
Rules of Decision Act (28 USCS § 1652) does not mandate application of state law
in actions brought under 42 USCS § 1983 even if state law is incorporated by
reference as part of that law; construction and elaboration of reach of § 1983 is
matter of federal law. Jones v Marshall (1975, CA2 Conn) 528 F2d 132.
122
245. Contempt proceedings
State court decision construing nature of contempt as defined by state statute was
controlling in federal court. Shumaker v Resoner (1929, DC Ind) 30 F2d 106.
246. Criminal offenses and proceedings
Predecessor of 28 USCS § 1652 did not apply in trial of criminal offenses against the
United States. United States v Reid (1851) 53 US 361, 12 How 361, 13 L Ed 1023
(ovrld in part by Rosen v United States (1918) 245 US 467, 62 L Ed 406, 38 S Ct
148); Funk v United States (1933) 290 US 371, 78 L Ed 369, 54 S Ct 212, 93 ALR
1136.
When criminal offenses under state statutes were involved in cases or proceedings in
federal courts, federal courts followed substantive law of the state as declared by
highest court of the state. Lambert v Barrett (1895) 157 US 697, 39 L Ed 865, 15 S
Ct 722.
Rulings of highest state court as to liability under penal statute of such state were
controlling in federal courts. Park Bank v Remsen (1895) 158 US 337, 39 L Ed
1008, 15 S Ct 891.
In habeas corpus proceedings to prevent extradition, doubtful questions respecting
validity of indictment were left to courts of demanding state. Person v Morrow
(1940, CA10 Kan) 108 F2d 838.
247. Disputes between states
Federal common law rather than state law is applicable in post-Erie dispute between
states. West Virginia ex rel. Dyer v Sims (1951) 341 US 22, 95 L Ed 713, 71 S Ct
557, 44 Ohio Ops 364, 62 Ohio L Abs 584.
State law is applicable in suit by Arkansas against Texas to enjoin Texas from
interfering unlawfully with contract between Arkansas and Texas foundation
whereby foundation was to contribute $ 500,000 to construction of Arkansas State
Hospital. Arkansas v Texas (1953) 346 US 368, 98 L Ed 80, 74 S Ct 109.
Federal common law applies in disputes between states over boundaries. Banco
Nacional de Cuba v Sabbatino (1964) 376 US 398, 11 L Ed 2d 804, 84 S Ct 923
(superseded by statute as stated in Industrial Inv. Dev. Corp. v Mitsui & Co. (1979,
CA5 Tex) 594 F2d 48, 1979-1 CCH Trade Cases P 62586) and (superseded by
statute as stated in Banco Nacional de Cuba v Chase Manhattan Bank (1981, CA2
NY) 658 F2d 875, 32 FR Serv 2d 79) and (superseded by statute as stated in Perez v
Chase Manhattan Bank, N. A. (1983, 1st Dept) 93 App Div 2d 402, 463 NYS2d 764)
and (criticized in Interpamil GmbH v Collectibles, Inc. (1999, SD NY) 1999 US Dist
LEXIS 17681).
123
248. Gifts
Intervivos gifts were included within scope of Provident Mut. Life Ins. Co. v Bennett
(1944, DC Iowa) 58 F Supp 72.
249. Guardian and ward
State court decision that guardian and sureties on his bond were estopped to deny
that ward-owned real estate bond described in guardian's petition for appointment,
and were estopped to deny guardian received proceeds of such bond, was binding on
federal court. Neal v Hodges (1935, DC Okla) 13 F Supp 916.
250. Immigration
Predecessor of 28 USCS § 1652 did not apply to hearing before administrative
officer of United States in immigration case. Ex parte Petterson (1908, DC Minn)
166 F 536.
Federal district court is not obliged to follow decision of state court of forum in
determining moral character of applicant for citizenship since court's jurisdiction
rests on federal naturalization statute. Petition of Lieberman (1943, DC NY) 50 F
Supp 121.
251. Interstate commerce
Decision of state court as to what constituted doing business in state was accepted,
but federal court would determine what constituted interstate commerce. Kansas
City Structural Steel Co. v Arkansas (1925) 269 US 148, 70 L Ed 204, 46 S Ct 59.
Construction of clause of bill of lading adopted by Interstate Commerce Commission
and prescribed by Congress for interstate rail shipments presented federal question.
Illinois Steel Co. v Baltimore & O. R. Co. (1944) 320 US 508, 88 L Ed 259, 64 S Ct
322.
In action under federal law for recovery of undercharges on shipments of freight in
interstate commerce, interest was allowed from date of occurrence of undercharges
without regard to substantive law of state. T. & M. Transp. Co. v S. W. Shattuck
Chemical Co. (1947, CA10 Colo) 158 F2d 909.
Federal court followed state rule that in absence of provision in bill of lading there
was no duty upon carrier to notify shipper of nondelivery of goods. Trinidad Bean &
Elevator Co. v Pennsylvania R. Co. (1933, DC Pa) 8 F Supp 888.
252. Labor relations and unions
124
Decision of Wisconsin supreme court that case involved "labor dispute" within
meaning of local statute was binding on federal courts. Senn v Tile Layers Protective
Union (1937) 301 US 468, 81 L Ed 1229, 57 S Ct 857, 1 CCH LC P 17023.
Questions of substance, including questions of conflict of laws, arising in action
brought, on ground of diversity of citizenship, in federal court by employee for
damages resulting from his wrongful discharge, are governed by state law and not by
federal law. Bernhardt v Polygraphic Co. of America (1956) 350 US 198, 100 L Ed
199, 76 S Ct 273, 29 CCH LC P 69689.
Federal common law rather than state law governs as to rights under contracts
between employer and labor organization representing employee in industry
affecting commerce or between any such labor organizations where suits are brought
with jurisdictional predicate under 29 USCS § 185(a). Textile Workers Union v
Lincoln Mills of Alabama (1957) 353 US 448, 1 L Ed 2d 972, 77 S Ct 912, 40 BNA
LRRM 2113, 40 BNA LRRM 2120, 32 CCH LC P 70733 (criticized in Kansas City
S. Transp. Co. v Teamsters Local Union # 41 (1997, CA8 Mo) 126 F3d 1059, 156
BNA LRRM 2496, 134 CCH LC P 10059); Charles Dowd Box Co. v Courtney
(1962) 368 US 502, 7 L Ed 2d 483, 82 S Ct 519, 49 BNA LRRM 2619, 44 CCH LC
P 50461; Local 174, Teamsters, Chauffeurs, Warehousemen & Helpers of Am. v
Lucas Flour Co. (1962) 369 US 95, 7 L Ed 2d 593, 82 S Ct 571, 49 BNA LRRM
2717, 44 CCH LC P 50470; Smith v Evening News Ass'n (1962) 371 US 195, 9 L
Ed 2d 246, 83 S Ct 267, 51 BNA LRRM 2646, 46 CCH LC P 17962; International
Ass'n of Machinists v Central Airlines, Inc. (1963) 372 US 682, 10 L Ed 2d 67, 83 S
Ct 956, 52 BNA LRRM 2803, 47 CCH LC P 18201, reh den (1963) 373 US 947, 10
L Ed 2d 702, 83 S Ct 1533, 47 CCH LC P 18274 and (criticized in Zeffiro v First
Pennsylvania Banking & Trust Co. (1980, CA3 Pa) 623 F2d 290, CCH Fed Secur L
Rep P 97514); United Packinghouse, Food & Allied Workers v Needham Packing
Co. (1964) 376 US 247, 11 L Ed 2d 680, 84 S Ct 773, 55 BNA LRRM 2580, 49
CCH LC P 18797; John Wiley & Sons, Inc. v Livingston (1964) 376 US 543, 11 L
Ed 2d 898, 84 S Ct 909, 55 BNA LRRM 2769, 49 CCH LC P 18846; Republic Steel
Corp. v Maddox (1965) 379 US 650, 13 L Ed 2d 580, 85 S Ct 614, 58 BNA LRRM
2193, 51 CCH LC P 19458; Avco Corp. v Aero Lodge No. 735 (1968) 390 US 557,
20 L Ed 2d 126, 88 S Ct 1235, 67 BNA LRRM 2881, 57 CCH LC P 12593, reh den
(1968) 391 US 929, 20 L Ed 2d 670, 88 S Ct 1801.
Federal common law applies in determining rights under contracts made pursuant to
§ 204 of Railway Labor Act. International Ass'n of Machinists v Central Airlines,
Inc. (1963) 372 US 682, 10 L Ed 2d 67, 83 S Ct 956, 52 BNA LRRM 2803, 47 CCH
LC P 18201, reh den (1963) 373 US 947, 10 L Ed 2d 702, 83 S Ct 1533, 47 CCH LC
P 18274 and (criticized in Zeffiro v First Pennsylvania Banking & Trust Co. (1980,
CA3 Pa) 623 F2d 290, CCH Fed Secur L Rep P 97514); Republic Steel Corp. v
Maddox (1965) 379 US 650, 13 L Ed 2d 580, 85 S Ct 614, 58 BNA LRRM 2193, 51
CCH LC P 19458.
125
Labor union's breach of its duty of fair representation is governed by federal
common law. Humphrey v Moore (1964) 375 US 335, 11 L Ed 2d 370, 84 S Ct 363,
55 BNA LRRM 2031, 48 CCH LC P 18670, reh den (1964) 376 US 935, 11 L Ed 2d
655, 84 S Ct 697, 49 CCH LC P 18756; Czosek v O'Mara (1970) 397 US 25, 25 L
Ed 2d 21, 90 S Ct 770, 73 BNA LRRM 2481, 62 CCH LC P 10680.
253. Maritime matters
Navigability was determinable by rule applied in federal courts and not by rule of
state where rights arising under Constitution of United States were involved. United
States v Holt State Bank (1926) 270 US 49, 70 L Ed 465, 46 S Ct 197; United States
v Utah (1930) 282 US 803, 75 L Ed 721, 51 S Ct 85; United States v Oregon (1935)
295 US 1, 79 L Ed 1267, 55 S Ct 610 (criticized in Defenders of Wildlife v Hull
(2001, App) 199 Ariz 411, 18 P3d 722, 341 Ariz Adv Rep 3).
Florida statute providing for survival of cause of action against deceased tortfeasor
was applicable in proceeding in admiralty for limitation of liability as to claims for
injuries occurring on vessel while within Florida's territorial waters. Just v Chambers
(1941) 312 US 383, 85 L Ed 903, 61 S Ct 687, reh den (1941) 312 US 716, 85 L Ed
1146.
Federal decisional law rather than state law applied to issues arising out of maritime
tort claims other than wrongful death actions. Garrett v Moore-McCormack Co.
(1942) 317 US 239, 87 L Ed 239, 63 S Ct 246.
In seaman's diversity suit for breach of a shipowner's oral agreement assuming all
consequences of seaman's improper or inadequate treatment at Public Health Service
Hospital, contract was maritime contract and it was not of such local nature as to
governed by forum state's statute of frauds rather than maritime general rule of law
that oral contracts are valid. Kossick v United Fruit Co. (1961) 365 US 731, 6 L Ed
2d 56, 81 S Ct 886, reh den (1961) 366 US 941, 6 L Ed 2d 852, 81 S Ct 1657.
Maritime law was unaffected by state legislation. Swayne & Hoyt, Inc. v Barsch
(1915, CA9 Or) 226 F 581.
Predecessor of 28 USCS § 1652 did not apply to admiralty suits. New England
Newspaper Pub. Co. v United States (1937, DC Mass) 18 F Supp 674.
254. Patents, copyrights and trademarks
Certain issues in patent cases, not covered by federal statute, would be decided by
federal common law rather than by state law. Scott Paper Co. v Marcalus Mfg. Co.
(1945) 326 US 249, 90 L Ed 47, 66 S Ct 101, 67 USPQ 193, reh den (1945) 326 US
811, 90 L Ed 495, 66 S Ct 263; MacGregor v Westinghouse Electric & Mfg. Co.
(1947) 329 US 402, 91 L Ed 380, 67 S Ct 421, 72 USPQ 21, reh den (1947) 330 US
853, 91 L Ed 1296, 67 S Ct 768; Blonder-Tongue Lab. v University of Illinois
126
Found. (1971) 402 US 313, 28 L Ed 2d 788, 91 S Ct 1434, 169 USPQ 513, 1971
CCH Trade Cases P 73565 (criticized in Abbott Labs. v Impax Labs. (2003, ND Ill)
2003 US Dist LEXIS 4819) and (criticized in Abbott Labs. v Impax Labs. (2003,
ND Ill) 2003 US Dist LEXIS 4945) and (criticized in Abbott Labs. v Impax Labs.
(2003, ND Ill) 2003 US Dist LEXIS 4962).
Doctrine of Erie R. Co. v Tompkins, was not applicable to trade-mark infringement
and unfair competition cases. Philco Corp. v Phillips Mfg. Co. (1943, CA7 Ill) 133
F2d 663, 56 USPQ 248, 148 ALR 125.
Indiana law was applicable to diversity action by Indiana manufacturer against
automobile manufacturer for unfair competition and for infringement of Indiana and
common-law trademark in word "Mustang" and representation of charging horse.
Westward Coach Mfg. Co. v Ford Motor Co. (1968, CA7 Ind) 388 F2d 627, 156
USPQ 437, 11 FR Serv 2d 696, cert den (1968) 392 US 927, 20 L Ed 2d 1386, 88 S
Ct 2286, 157 USPQ 720.
Federal courts ordinarily apply state law in diversity cases alleging infringement of
unregistered trademarks. International Order of Job's Daughters v Lindeburg & Co.
(1980, CA9 Cal) 633 F2d 912, 208 USPQ 718, cert den (1981) 452 US 941, 69 L Ed
2d 956, 101 S Ct 3086, 213 USPQ 1056.
Since state supreme court had determined that illegitimate daughter of
composer/singer was heir entitled to inherit from his estate, she was entitled to
appropriate share of copyright renewals for copyrights renewed under 1909 Act.
Stone v Williams (1992, CA2 NY) 970 F2d 1043, 23 USPQ2d 1492, cert den (1993)
508 US 906, 124 L Ed 2d 243, 113 S Ct 2331 and (ovrld in part as stated in Auscape
Int'l v Nat'l Geographic Soc'y (2004, SD NY) 32 Media L R 2226, 71 USPQ2d
1874).
255. Political parties and activities
Whether, in any given circumstances, political parties or their committees were
agencies of the United States within 14th or 15th Amendment of USCS Constitution
was question which United States Supreme Court determined for itself. Nixon v
Condon (1932) 286 US 73, 76 L Ed 984, 52 S Ct 484, 88 ALR 458.
Decision of Texas court, which construed statute as not prohibiting declarations of
policy by political convention called to elect delegates to national convention,
though not binding on United States Supreme Court, was entitled to highest respect.
Grovey v Townsend (1935) 295 US 45, 79 L Ed 1292, 55 S Ct 622, 97 ALR 680
(ovrld in part by Smith v Allwright (1944) 321 US 649, 88 L Ed 987, 64 S Ct 757,
151 ALR 1110) and (ovrld as stated in Morse v Republican Party (1996) 517 US
186, 134 L Ed 2d 347, 116 S Ct 1186, 96 CDOS 2072, 96 Daily Journal DAR 3467,
9 FLW Fed S 459).
127
256. Pollution
Remedy under federal common law of nuisance is not available to state seeking
abatement of nuisance caused by sewer discharges of municipality of neighboring
state. Milwaukee v Illinois (1981) 451 US 304, 68 L Ed 2d 114, 101 S Ct 1784, 15
Envt Rep Cas 1908, 11 ELR 20406.
257. Public officers and employees
Status of railroad policemen commissioned by governor under state statutes was
controlled by state decision. Murray v Payne (1921, CA3 NJ) 273 F 820.
Liability of town treasurer in Connecticut for safe keeping of town funds was matter
to be determined in accordance with law of state. Hamden v American Surety Co.
(1935, DC Conn) 9 F Supp 733, affd (1937, CA2 Conn) 93 F2d 482, cert den (1938)
303 US 648, 82 L Ed 1109, 58 S Ct 647.
258. Railroads
Federal common law rather than state law governs certain issues in suits involving
railroads. Illinois Steel Co. v Baltimore & O. R. Co. (1944) 320 US 508, 88 L Ed
259, 64 S Ct 322; Brotherhood of R. Trainmen v Jacksonville Terminal Co. (1969)
394 US 369, 22 L Ed 2d 344, 89 S Ct 1109, 70 BNA LRRM 2961, 59 CCH LC P
13362, reh den (1969) 394 US 1024, 23 L Ed 2d 51, 89 S Ct 1622.
259. Securities regulation
There is no private cause of action for violation of 15 USCS § 78q(a). Touche Ross
& Co. v Redington (1979) 442 US 560, 61 L Ed 2d 82, 99 S Ct 2479, CCH Fed
Secur L Rep P 96894 (criticized in Kathleen "S" v Ochsner Clinic (1997, ED La)
1997 US Dist LEXIS 20386).
In suit involving both federal securities claims and state common law fraud claims,
court would apply to state claims same judicial estoppel rule used for securities
claim where both sides treated judicial estoppel as doctrine to be shaped by court in
which case was pending. Astor Chauffeured Limousine Co. v Runnfeldt Inv. Corp.
(1990, CA7 Ill) 910 F2d 1540, CCH Fed Secur L Rep P 95459.
260. Social or religious organization
Construction given to charter and constitution of fraternal order by courts of state of
its creation was binding on federal court of another state. Wertheimer v Travelers'
Protective Asso. (1933, CA10 Utah) 64 F2d 435.
128
Construction of constitution of fraternal beneficiary association by highest court of
state in which it had its domicile was controlling on federal court. Parker v Parker
(1936, CA10 Colo) 82 F2d 575.
261. State exemption statutes
Federal courts construed state exemption statutes if there were no controlling state
decisions. Vought v Kanne (1926, CA8 Minn) 10 F2d 747, cert dismd (1927) 275
US 574, 72 L Ed 433, 48 S Ct 16.
Federal courts followed state construction of exemption statutes. Garber v Bankers'
Mortg. Co. (1928, DC Kan) 27 F2d 609.
State court decision as to exempt character of surrender value of life policy under
state exemption statute was binding on federal court. In re Pinals (1930, DC NJ) 38
F2d 117, affd (1930, CA3 NJ) 43 F2d 74; In re Erstine (1930, DC Ark) 41 F2d 559.
Federal court decisions, and not state court decisions, were followed in determining
applicability of state exemption law in bankruptcy proceedings. In re Solomons
(1932, DC NY) 2 F Supp 572.
Decision of state court that statute was exemption statute was binding on federal
court, but question whether it impaired obligation of contracts was one that federal
courts themselves would determine. In re Marx (1933, DC Ark) 5 F Supp 954.
In bankruptcy proceedings, federal court was bound by interpretation of exemption
statute of state within whose limits court existed. In re Cameron (1934, DC Ill) 6 F
Supp 530.
262. Workers' compensation acts
In diversity action in which recovery for negligently caused personal injury is sought
and in which defendant claims that, under applicable state workmen's compensation
statute, he is accorded immunity from liability for negligence and is liable only for
workmen's compensation, federal court is not bound, under Erie Railroad v
Tompkins doctrine, by state court decisions to effect that factual issues raised by
such defense are for determination by the court and not the jury where (1) state court
decisions indicate that rule announced therein is merely requirement regarding form
and mode of enforcing immunity from negligence liability, and is not integral part of
the special relationship created by statute; (2) application of state rule, although
insuring uniformity of results in state and federal cases, would disrupt federal system
of allocating functions between judge and jury; and (3) the facts involved in the
litigation do not give rise to the certainty that its outcome will be substantially
affected by whether issue of immunity is decided by a judge or a jury. Byrd v Blue
Ridge Rural Elec. Coop. (1958) 356 US 525, 2 L Ed 2d 953, 78 S Ct 893, reh den
(1958) 357 US 933, 2 L Ed 2d 1375, 78 S Ct 1366 and on remand, remanded (1958,
129
CA4 SC) 264 F2d 689 and (ovrld as stated in Walters v Inexco Oil Co. (1983, Miss)
440 So 2d 268) and (criticized in Vaught v Showa Denko K.K. (1997, CA5 Tex) 107
F3d 1137, CCH Prod Liab Rep P 14881, 37 FR Serv 3d 134).
Construction of state compensation act by state courts was controlling in federal
courts. Warlop v Western Coal & Mining Co. (1928, CA8 Kan) 24 F2d 926; Mobile
& O. R. Co. v Industrial Com. (1928, DC Ill) 28 F2d 228; Phillips Petroleum Co. v
Miller (1936, CA8 Minn) 84 F2d 148.
State supreme court's construction of "accident," as related to compensable injury
under state statute, was binding in federal courts sitting in such state. Sullivan
Mining Co. v Aschenbach (1929, CA9 Idaho) 33 F2d 1, cert den (1929) 280 US 586,
74 L Ed 635, 50 S Ct 35.
Construction of state workmen's compensation law by state courts would be
controlling on federal court sitting in state. Associated Indem. Corp. v Scott (1939,
CA5 Tex) 103 F2d 203.
Whether enforcement of Kansas workmen's compensation act by Missouri, in
preference to its own, ran counter to Missouri domestic policy was question
exclusively for Missouri courts. Yellow Cab Transit Co. v Overcash (1942, CA8
Mo) 133 F2d 228.
Pennsylvania law in workmen's compensation action governs diversity action in
federal court in Pennsylvania. Berkowitz v Philadelphia Chewing Gum Corp. (1963,
CA3 Pa) 317 F2d 192.
Federal court had no jurisdiction of suit for damages and for compensation under
state workmen's compensation law, where supreme court of state held that no court
had jurisdiction until claim had been filed with state board. Elliott v De Soto Crude
Oil Purchasing Corp. (1937, DC La) 20 F Supp 743.
In action under state employers' liability act, admission of testimony of deceased
employee as to his marital relationship with plaintiff was not substantive to extent of
requiring federal district court to follow state law. Franzen v E. I. Du Pont De
Nemours & Co. (1943, DC NJ) 51 F Supp 578, affd (1944, CA3 NJ) 146 F2d 837.
Employer's right to sue tortfeasor, as subrogee of employee's beneficiary under
workmen's compensation act was matter of substance, and rule of Erie Railroad Co.
v Tompkins, was equally pertinent as Rule 17(b) of USCS Rules of Civil Procedure.
Melella v Savage (1945, DC Del) 59 F Supp 258.
263. Zoning and land use
Decision of state's highest court that ordinance is within city charter's power and not
forbidden by state constitution, is binding on federal court where injunction suit is
130
brought by property owners in zone adjacent to one rezoned by ordinance. Mestre v
Atlanta (1958, CA5 Ga) 255 F2d 401.
L.Practice and Procedure
1.In General
264. Appeal
Determination of Illinois courts that appeal to appellate court instead of Supreme
Court was waiver of constitutional question was binding on United States Supreme
Court. Central Union Tel. Co. v Edwardsville (1925) 269 US 190, 70 L Ed 229, 46 S
Ct 90.
Where case had been in state supreme court and remanded, and then later transferred
to federal court, federal court was not bound by rulings of state court on first appeal
if later state supreme court decision had effect of modifying such rulings, in which
case federal court could follow later state court decision; but, later state court
decision did not modify decision of state court in case on first appeal. Wichita
Royalty Co. v City Nat'l Bank (1939) 306 US 103, 83 L Ed 515, 59 S Ct 420.
Decisions of state's highest court as to status of state court's judgment and its finality
pending appeal therefrom, were binding on federal courts. Coppedge v Clinton
(1934, CA10 Okla) 72 F2d 531.
Mississippi statute which imposes mandatory 15 percent penalty on unsuccessful
appellant is applicable to diversity suit in federal court. Walters v Inexco Oil Co.
(1984, CA5 Miss) 725 F2d 1014.
265. Attorneys' fees
State statute permitting recovery of attorney fees was applied in suit on insurance
contract. Fidelity Mut. Life Asso. v Mettler (1902) 185 US 308, 46 L Ed 922, 22 S
Ct 662; Iowa Life Ins. Co. v Lewis (1902) 187 US 335, 47 L Ed 204, 23 S Ct 126;
Home Life Ins. Co. v Fisher (1903) 188 US 726, 47 L Ed 667, 23 S Ct 380.
Federal court could allow attorney fees in foreclosure suit, where such fees were
allowable under state statute. Continental & Commercial Trust & Sav. Bank v
Continental Supply Co. (1929, CA8 Okla) 32 F2d 740.
Attorney fees permitted by state statute were not costs in ordinary sense and could be
included in federal court judgment, though state statute provided that such fee would
be taxed as costs. Associated Mfrs. Corp. v De Jong (1933, CA8 Iowa) 64 F2d 64.
In suit in Louisiana on contract for sale of goods made in Texas, law of Texas
governed recovery of attorney fees. Globe & Rutgers Fire Ins. Co. v Brown (1931,
DC La) 52 F2d 164.
131
In condemnation proceedings by government, federal court was not bound by
decisions of state court with respect to costs and attorney fees. In re Hastings Lock &
Dam (1932, DC Minn) 2 F Supp 324.
Although other aspects of action may be governed by state law, federal courts in
interpleader apply federal common law to question whether plaintiff may recover
attorneys' fees from interpleaded fund. Fidelity Bank v Commonwealth Marine &
General Assurance Co. (1984, ED Pa) 592 F Supp 513.
Law of state where land lay, parties contracted, and where litigation out of which
claims arose was begun and concluded governs as to right of recovery of expenses,
including attorney fees, in suits for breach of covenant of general warranty.
Richmond F. R. Co. v United States Housing Corp. (1934, Dist Col App) 63 App
DC 285, 72 F2d 78.
266.--Liens and remedies of attorney
States statute providing that in suit on insurance or surety contract reasonable
attorney fee would be allowed as costs was held applicable to suit on depository
bond in federal courts, federal statutes on subject of costs having reference to
ordinary costs. Sioux County v National Surety Co. (1928) 276 US 238, 72 L Ed
547, 48 S Ct 239.
State law as to attorney's lien was given effect in federal court. Webster v Sweat
(1933, CA5 Miss) 65 F2d 109.
In action to recover on bond for counsel fees incurred in defending attachment which
was dismissed, New York law, where action was tried, controlled. T. W. Warner Co.
v Andrews (1934, CA2 NY) 73 F2d 287, cert den (1935) 294 US 717, 79 L Ed 1250,
55 S Ct 515.
Interpretation by state court of statute concerning lien of attorney was held binding
on federal court. German v Universal Oil Products Co. (1935, CA8 Mo) 77 F2d 70.
Where state statute allowed grant of attorney fees in actions on insurance policies,
and district court allowed attorneys' fees in action on bond as within statute, court of
appeals in affirming, would also allow appellee attorney fees. American Surety Co. v
Fischer Warehouse Co. (1937, CA9 Or) 88 F2d 536.
State statute conferring attorney's lien on client's cause of action enforceable
summarily in ancillary proceeding gave attorney for plaintiff in patent infringement
suit equitable right and remedy enforceable on chancery side of federal court sitting
in such state. Nic Projector Corp. v Movie-Jecktor Co. (1935, DC NY) 16 F Supp
605.
132
State statute giving attorney lien for his compensation upon his client's cause, not to
be affected by any settlement between parties before or after judgment, could not be
given effect by federal courts. Sherry v Oceanic Steam Nav. Co. (1895, CCD NY)
72 F 565.
267.--Notes containing provision for attorneys' fees
Provision in note for payment of attorney fees was held matter of general law on
which federal court would exercise independent judgment, though state court's
decision was grounded on public policy; where notes were made and were payable
in Virginia, in which state stipulation for attorney fees was valid, federal court in
West Virginia would enforce notes, though courts of latter state had held that such
stipulation was contrary to public policy of state. Citizens Nat'l Bank v Waugh
(1935, CA4 W Va) 78 F2d 325, 100 ALR 939.
268. Bonds and deposits
Conditions of bail bond were governed by state law. National Surety Co. v United
States (1928, CA9 Wash) 29 F2d 92.
Medical malpractice tribunal operating as adjunct of state courts is not inherently
unfair to out of state plaintiffs where constraints imposed upon plaintiff by necessity
of either prevailing before tribunal or filing bond for defendant's costs and attorney's
fees are state created limitations upon plaintiff's right of recovery which federal court
must apply in diversity actions. Feinstein v Massachusetts General Hospital (1981,
CA1 Mass) 643 F2d 880.
Liability of administrator of surety on bail bond taken in federal court depended on
common law and statutes of state. United States v Ewing (1927, DC Miss) 19 F2d
378.
In cross complaint by defendant based on libel, plaintiff was entitled to cost bond as
required by state act, since provision for bond was not procedural rule, but one
dealing with substantive law. Keller Research Corp. v Roquerre (1951, DC Cal) 99 F
Supp 964.
269. Capacity to sue or be sued
State law controls as to standing to sue in diversity cases. Woods v Interstate Realty
Co. (1949) 337 US 535, 93 L Ed 1524, 69 S Ct 1235 (criticized in McKenzie v
Hawaii Permanente Med. Group, Inc. (1998, DC Hawaii) 29 F Supp 2d 1174);
Swanson v Traer (1957) 354 US 114, 1 L Ed 2d 1221, 77 S Ct 1116, 68 ALR2d 820.
In federal district court, sitting in matter in which it was alleged there was diversity
jurisdiction, law of state in which court sat was controlling in determining capacity
of parties and their suability at law. Worthington Pump & Machinery Corp. v United
133
Electrical Radio, & Machine Workers (1945, DC Mass) 63 F Supp 411, 17 BNA
LRRM 608, 10 CCH LC P 62838.
270.--Agents
Though case was one on cause of action given by federal statute and within
exclusive jurisdiction of federal courts, court could adopt state practice and permit
agent to sue in his own name upon contract not under seal made by such agent on
behalf of an undisclosed principal. United States use of Electric Storage Battery Co.
v Boat Harbor Marine R. Co. (1932, DC Va) 58 F2d 366.
271.--Assignees
State statute enabling assignee to sue in his own name was applied in federal courts.
N. & G. Taylor Co. v Anderson (1928) 275 US 431, 72 L Ed 354, 48 S Ct 144.
Where state statute prevented assignee of chose in action from suing in his own
name, federal courts had to conform. Nederland L. Ins. Co. v Hall (1898, CA7 Ill) 84
F 278.
Where state statute provided that assignee of cause of action, assignment being in
writing, could sue although interest therein was retained by assignor, federal courts
would follow it. Dexter, Horton & Co. v Sayward (1892, CCD Wash) 51 F 729.
272.--State or political subdivisions
Law requiring presentation of claims against county was binding on federal court.
Covington County v Stevens (1919, CA5 Ala) 256 F 328.
273. Damages
State laws as to what damages were recoverable were considered in determining
whether amount involved was sufficient to give it jurisdiction. Vance v W. A.
Vandercook Co. (1898) 170 US 468, 42 L Ed 1111, 18 S Ct 645.
Measure of damages must be determined by laws of California, in actions in federal
district court by Bank of China against American bank to recover deposit and for
damages for refusal of American bank to pay demand for funds in deposit. Bank of
China v Wells Fargo Bank & Union Trust Co. (1953, CA9 Cal) 209 F2d 467, 48
ALR2d 172.
In diversity cases, damages awarded by federal court jury should not exceed those
which could be sustained were case before supreme court of that state. Perry v
Bertsch (1971, CA8 ND) 441 F2d 939.
134
Federal Law is applicable in diversity case otherwise governed by Arizona law on
issue of whether jury should be instructed that damage award will be subject to
federal income taxation, since none of reasons articulated by Arizona Supreme Court
for not mandating instruction, which included assertions that instruction would
complicate trial, invite flood of cautionary instructions, and be unnecessary where
jury was instructed on proper measure of damages, were of substantive nature. In re
Air Crash Disaster near Chicago (1986, CA7 Ill) 803 F2d 304, 21 Fed Rules Evid
Serv 1092.
Applicable state law determines measure of damages in action based on violation of
Federal Aviation Act. Gabel v Hughes Air Corp. (1972, CD Cal) 350 F Supp 612, 31
ALR Fed 253.
In action brought in state court under Emergency Price Control Act, amount of
damages was governed by statute and not by state policy. Walker v Gilman (1946)
25 Wash 2d 557, 171 P2d 797.
274.--Punitive or exemplary damages
Propriety of punitive damages in federal question not controlled by state decisions.
Western Union Tel. Co. v Aldridge (1933, CA9 Cal) 66 F2d 26, 89 ALR 352.
In action for real property damages in federal district court in Pennsylvania, law
applicable to recovery of punitive damages is that of Pennsylvania. Suflas v
Cleveland Wrecking Co. (1963, ED Pa) 218 F Supp 289.
Whether punitive damages were allowable in wrongful death action in federal court
was question for determination under state law. Eria v Texas Eastern Transmission
Corp. (1974, ED NY) 377 F Supp 344, remanded without op (1975, CA2 NY) 535
F2d 1241 and remanded without op (1975, CA2 NY) 535 F2d 1243.
275. Jurisdiction
Federal courts followed decisions of state courts as to their own jurisdiction.
Manning v Ketcham (1932, CA6 Ky) 58 F2d 948.
Erie v Tompkins doctrine was confined solely to matters of substance and not of
jurisdiction. Stephenson v Grand T. W. R. Co. (1940, CA7 Ill) 110 F2d 401, 132
ALR 455, cert dismd (1940) 311 US 720, 85 L Ed 469, 60 S Ct 1107.
Rule of Erie R. Co. v Tompkins is applicable to claim under state law over which
federal jurisdiction extends solely by virtue of doctrine of pendent jurisdiction.
Taussig v Wellington Fund, Inc. (1963, CA3 Del) 313 F2d 472, 136 USPQ 279, 6
FR Serv 2d 358, cert den (1963) 374 US 806, 10 L Ed 2d 1031, 83 S Ct 1693 and
cert den (1963) 374 US 806, 10 L Ed 2d 1031, 83 S Ct 1695; Flexitized, Inc. v
135
National Flexitized Corp. (1964, CA2 NY) 335 F2d 774, 142 USPQ 334, cert den
(1965) 380 US 913, 13 L Ed 2d 799, 85 S Ct 899, 144 USPQ 780.
No ouster of federal jurisdiction results when, by reason of policies expressed in
Erie, federal court requires that state's rule barring action from proceeding in its
courts must be applied to bar action from federal court. Feinstein v Massachusetts
General Hospital (1981, CA1 Mass) 643 F2d 880.
Lawsuit against American manufacturer arising out of combine accident in Canada
is dismissed on basis of comity and forum non conveniens, where only relationship
with Illinois is fact that combine was manufactured here while all other relationships
with parties and occurrences are Canadian and virtually identical suit is pending in
Alberta, Canada, because Illinois civil procedure rule allowing dismissal of this type
of suit should be applied since no federal rule pertains under 28 USCS § 1652. Ball v
Deere & Co. (1988, CD Ill) 684 F Supp 1455 (criticized in Pedersen v Chicago
Transit Auth. (1996, ND Ill) 1996 US Dist LEXIS 8056).
276. Pleading and proof
Federal courts take judicial notice of laws of several states of United States; this
includes Constitution, statutes, and decisions of highest court of state; thus, they take
judicial notice of laws of state in which federal trial court sits. Covington
Drawbridge Co. v Shepherd (1858) 61 US 227, 20 How 227, 15 L Ed 896; Junction
R. Co. v Bank of Ashland (1871) 79 US 226, 12 Wall 226, 20 L Ed 385; Gormley v
Bunyan (1891) 138 US 623, 34 L Ed 1086, 11 S Ct 453; Straton v New (1931) 283
US 318, 75 L Ed 1060, 51 S Ct 465.
In action in federal court in Pennsylvania for tort committed in New York, law of
New York was sufficiently proved; hence, it was controlling. Delaware & Hudson
Co. v Nahas (1926, CA3 Pa) 14 F2d 56.
Where businessman and businesses asserted defamation claims against organization
for publishing reports alleging criminal connections, appellants could not amend
their complaint because appellants did not seek to amend complaint to assure court
of its jurisdiction and did not raise issue before district court. Jankovic v Int'l Crisis
Group (2007, App DC) 494 F3d 1080.
Federal courts take judicial notice of laws of other states. Dougherty v Gutenstein
(1935, DC NY) 10 F Supp 782; Cheever v Wilson (1870) 76 US 108, 9 Wall 108, 19
L Ed 604; Lamar v Micou (1885) 114 US 218, 29 L Ed 94, 5 S Ct 857; Gormley v
Bunyan (1891) 138 US 623, 34 L Ed 1086, 11 S Ct 453; Hogan v O'Neill (1921) 255
US 52, 65 L Ed 497, 41 S Ct 222; Parker v Parker (1936, CA10 Colo) 82 F2d 575;
In re Paramount Publix Corp. (1936, CA2 NY) 85 F2d 83; Clinton v Coppedge
(1933, DC Okla) 2 F Supp 935; Ickes v Gazzam (1936, Dist Col App) 65 App DC
346, 83 F2d 603.
136
For purposes of pleading and proof, federal district court would judicially notice law
of any state of union whether depending upon statutes or judicial opinions. Richter v
Empire Trust Co. (1937, DC NY) 20 F Supp 289.
277. Remedies
Remedy by injunction available in state court was also available in federal court.
Seay v Hawkins (1927, CA8 Okla) 17 F2d 710.
Liability under bond exacted by federal court in granting injunction was question of
federal law. Duke Power Co. v Greenwood County (1938, DC SC) 25 F Supp 419.
Where case involving labor dispute was subject to state law, and plaintiff was
entitled to injunctive relief, but, because there was diversity of citizenship with more
than jurisdictional amount in controversy, jurisdiction was had in federal district
court, that court was without judicial power, in face of Norris-LaGuardia Act, to
grant injunctive relief. Tri-Plex Shoe Co. v Cantor (1939, DC Pa) 25 F Supp 996, 3
BNA LRRM 744, 1 CCH LC P 18293.
Question of assignability of causes of action arising under Sherman Antitrust Act
involved limitation upon remedy for right created by federal statute, and was not
remedial incident to right created in sense that local law of forum could be
disregarded in determination of question. Momand v Twentieth-Century Fox Film
Corp. (1941, DC Okla) 37 F Supp 649.
278. Removal
Where, if cause had remained in state court, where it was originally brought,
complainant would have been entitled, under public policy of state of Minnesota,
manifested by its statutes as construed by its courts, to have usurious contract
canceled and surrendered without tendering payment of whole or any part of original
indebtedness, defendant company could not, by removing case to federal court, on
ground that it was citizen of another state, deprive complainants of such substantive
right. Missouri, Kansas & Texas Trust Co. v Krumseig (1899) 172 US 351, 43 L Ed
474, 19 S Ct 179.
Rule of Erie Railroad Co. v Tompkins was applicable to diversity causes removed to
federal courts as well as to such actions originating there. Freeman v Bee Machine
Co. (1943) 319 US 448, 87 L Ed 1509, 63 S Ct 1146, 57 USPQ 349, reh den (1943)
320 US 809, 88 L Ed 489, 64 S Ct 27 and (superseded by statute as stated in
Nordlicht v New York Tel. Co. (1986, CA2 NY) 799 F2d 859).
Decisions of state court as to nature of proceedings were not binding on federal court
in determining question of removal to federal court. Marchant v Mead-Morrison
Mfg. Co. (1928, CA2 NY) 29 F2d 40, cert den (1929) 278 US 655, 73 L Ed 565, 49
S Ct 179.
137
Where prosecution in state court for violation of state statutes was removed to
federal court, federal court applied federal law as to procedure and state law as to
substantive matters. Miller v Kentucky (1930, CA6 Ky) 40 F2d 820; Smith v United
States (1932, CA5 Tex) 58 F2d 735, cert den (1932) 287 US 631, 77 L Ed 547, 53 S
Ct 82.
In garnishment proceedings begun in state court and removed to federal court, law to
be applied was that of state as found in its statutes and decisions of its courts.
Socony-Vacuum Oil Co. v C. M. Johnston & Sons Sand & Gravel Co. (1939, CA8
Mo) 103 F2d 275.
Propriety of joinder of persons for purpose of removal was determined by state law.
Burrichter v Chicago, M. & St. P. R. Co. (1925, DC Minn) 10 F2d 165.
On motion to remand cause back to state court from which it was removed, state
court decision as to what constitutes joint liability was controlling in federal courts.
Lynch v Springfield Fire & Marine Ins. Co. (1926, DC NY) 15 F2d 725.
State law as construed by state court controlled in determining separable character of
cause of action for purpose of removal to federal court. Jennings v Southern R. Co.
(1930, DC SC) 40 F2d 951.
Predecessor of 28 USCS § 1652 applied whether action was originally brought in
federal court or was removed thereto from state court. Ford v Grocers' Mut. Ins. Co.
(1931, DC Pa) 4 F Supp 911.
Decision of state court as to right of removal to federal court was not binding on
latter court. Newberry v Meadows Fertilizer Co. (1932, DC NC) 1 F Supp 665;
Fournet v De Vilbliss (1938, DC La) 24 F Supp 60.
Defendants request for award of attorneys' fees and damages under Illinois
injunction statute in action removed to federal court cannot be granted since statute
governs procedure in Illinois courts and can have no force or effect in federal courts.
Progressive Steelworkers Union v International Harvester Corp. (1976, ND Ill) 70
FRD 691, 94 BNA LRRM 2687, 80 CCH LC P 11874, 22 FR Serv 2d 357.
279. Right to jury trial
State rule that court rather than jury decides issue whether defendant in personal
injury suit is employer of plaintiff, and therefore liable to plaintiff only for
workmen's compensation benefits, was inapplicable in diversity suit brought in
federal court sitting in South Carolina. Byrd v Blue Ridge Rural Elec. Coop. (1958)
356 US 525, 2 L Ed 2d 953, 78 S Ct 893, reh den (1958) 357 US 933, 2 L Ed 2d
1375, 78 S Ct 1366 and on remand, remanded (1958, CA4 SC) 264 F2d 689 and
(ovrld as stated in Walters v Inexco Oil Co. (1983, Miss) 440 So 2d 268) and
138
(criticized in Vaught v Showa Denko K.K. (1997, CA5 Tex) 107 F3d 1137, CCH
Prod Liab Rep P 14881, 37 FR Serv 3d 134).
Characterization of state-created claim as legal or equitable for purposes of whether
right to jury trial exists must be made by recourse to federal law. Simler v Conner
(1963) 372 US 221, 9 L Ed 2d 691, 83 S Ct 609, 6 FR Serv 2d 803.
In federal courts, right to jury trial is determined as matter of federal law in diversity
as well as in other actions. Ammons v Franklin Life Ins. Co. (1965, CA5 Ala) 348
F2d 414, 14 ALR3d 776; Gutierrez v Union P. R. Co. (1966, CA10 Colo) 372 F2d
121; Halladay v Verschoor (1967, CA8 SD) 381 F2d 100, 11 FR Serv 2d 466.
280. Setoff
In cases arising exclusively under federal law, rule as to set-off could not be
influenced by any local law or usage. United States v Robeson (1835) 34 US 319, 9
Pet 319, 9 L Ed 142.
State statute governing right of set-off did not control in actions by United States.
Fisher Flouring Mills Co. v United States (1927, CA9 Wash) 17 F2d 232.
While federal court of equity was not restricted in its allowance of set-off to
limitations prescribed by state statute, if statutory right was broader than that in
equity federal court would enforce statutory right. First Nat'l Bank v Malone (1935,
CA8 Iowa) 76 F2d 251.
Federal courts exercised independent judgment on matters of set-off, and there had
to be mutuality of rights before set-off could be asserted. Thomas v Potter Title &
Trust Co. (1932, DC Pa) 2 F Supp 12.
Right of set-off was one of substantive law controlled by federal decisions. Wisdom
v Guess Drycleaning Co. (1934, DC Miss) 5 F Supp 762.
281. Subrogation
Right to subrogation was question of general law as to which state decisions were
not controlling in federal courts. Farmers' Bank v Hayes (1932, CA6 Tenn) 58 F2d
34, cert den (1932) 287 US 602, 77 L Ed 524, 53 S Ct 8.
282. Survival or actions
Whether right of action survived depended on substance of cause of action, not on
forms of proceeding to enforce it. Martin's Adm'r v Baltimore & O. R. Co. (1894)
151 US 673, 38 L Ed 311, 14 S Ct 533.
139
Survival of right of action depended upon law of the state, but revivor in admiralty,
being matter of procedure, depended upon practice of admiralty. American Transp.
Co. v Swift & Co. (1928, CA2 NY) 24 F2d 310.
Predecessor of 28 USCS § 1652 was applicable to revival statutes of states and
applied to actions against United States. Craig v United States (1937, CA10 Kan) 89
F2d 586.
On question of revivor law of state where action was commenced governed.
Winslow v Domesitc Engineering Co. (1937, DC NY) 20 F Supp 578.
283.--Death of plaintiff
Revivor of action for personal injuries on death of plaintiff was governed by laws of
state where brought. Baltimore & O. R. Co. v Joy (1899) 173 US 226, 43 L Ed 677,
19 S Ct 387.
Whether right of action under Sherman Antitrust Act survived death of injured
person was held question of general law, hence federal court was not required to
follow decision of state court. Moore v Backus (1935, CA7 Ill) 78 F2d 571, 101
ALR 379, cert den (1935) 296 US 640, 80 L Ed 455, 56 S Ct 173.
Question whether war risk insurance action abated upon death of plaintiff, where he
had signed and sworn to his petition but nothing more had been done, was held
determinable under federal statutes, and not according to state procedure. Spencer v
United States (1936, DC Mass) 14 F Supp 46.
State law controlled as to whether action for damages for wrongful discharge of
employee of defendant, and to enforce award of national railroad adjustment board,
continued after death of employee instituting such action. System Federation, R.
Employees v Louisiana & A. R. Co. (1944, DC La) 57 F Supp 151.
Right of survival of causes of action, notwithstanding death of party to whom right
of action originally accrued, created by provisions of state statutes, was matter of
substance. Y-Ta-Tah-Wah v Rebock (1900, CCD Iowa) 105 F 257.
284.--Death of defendant
Whether action survived depended on substance of cause of action, not on forms of
proceeding to enforce it; and, as nature of penalties and forfeitures imposed by acts
of Congress could not be changed by state laws, it followed that state statutes,
allowing suits on state penal statutes to be prosecuted after death of offender, could
have no effect on suits in federal courts for recovery of penalties imposed by act of
Congress. Schreiber v Sharpless (1884) 110 US 76, 28 L Ed 65, 3 S Ct 423.
140
Law of place of wrong determined whether claim for damages survived death of
wrongdoer. Ormsby v Chase (1933) 290 US 387, 78 L Ed 378, 54 S Ct 211, 92 ALR
1499.
Florida statute providing for survival of cause of action against deceased tortfeasor
was applicable in proceeding in admiralty for limitation of liability as to claims for
injuries occurring on vessel while within Florida's territorial waters. Just v Chambers
(1941) 312 US 383, 85 L Ed 903, 61 S Ct 687, reh den (1941) 312 US 716, 85 L Ed
1146.
Time within which representatives of deceased party defendant could be brought in,
not being fixed by federal statute, state law on subject governed. Wing v McCallum
(1923, CA1 Mass) 292 F 810.
State law applied in determining whether action under 12 USCS §§ 93, 161 survived
on death of defendant. Benton v Deininger (1927, DC NY) 21 F2d 657.
Suit could not be maintained in federal court in New York for negligent injury
sustained in New Jersey by resident of New Jersey, where wrongdoer died before
commencement of suit and New York statute, as construed by decision of New York
court, prohibited such suit, though statute of New Jersey permitted such suit, since
maintenance of such suit would be offensive to public policy of New York.
Dougherty v Gutenstein (1935, DC NY) 10 F Supp 782.
Although provisions for revival of actions in federal statutes related only to personal
actions, action in ejectment, where it was not merely personal action but also
determined questions of title, could be revived in accordance with state provisions
on death of defendant. McArthur v Williamson (1891, CCD Ohio) 45 F 154.
285. Other
For purposes of well-settled rule that matters of procedure are necessarily governed
by law of forum while matters of substance may be governed by law of another
jurisdiction, federal courts, in diversity cases, are bound by substantive or procedural
classification given to question by law of state in which they are sitting. Klaxon Co.
v Stentor Electric Mfg. Co. (1941) 313 US 487, 85 L Ed 1477, 61 S Ct 1020, 49
USPQ 515; Palmer v Hoffman (1943) 318 US 109, 87 L Ed 645, 63 S Ct 477, 144
ALR 719, reh den (1943) 318 US 800, 87 L Ed 1163, 63 S Ct 757.
Federal decisional law applies on question whether federal constitutional right has
been waived. Douglas v Alabama (1965) 380 US 415, 13 L Ed 2d 934, 85 S Ct
1074; Brookhart v Janis (1966) 384 US 1, 16 L Ed 2d 314, 86 S Ct 1245, 7 Ohio
Misc 77, 36 Ohio Ops 2d 141.
Whether violation of federal constitutional right is harmless error under
circumstances is controlled by applicable federal decisional law. Chapman v
141
California (1967) 386 US 18, 17 L Ed 2d 705, 87 S Ct 824, 24 ALR3d 1065, reh den
(1967) 386 US 987, 18 L Ed 2d 241, 87 S Ct 1283 and (criticized in Brecht v
Abrahamson (1993) 507 US 619, 123 L Ed 2d 353, 113 S Ct 1710, 93 CDOS 2881,
93 Daily Journal DAR 5003, 7 FLW Fed S 179) and (ovrld in part as stated in
Sherley v Commonwealth (1994, Ky) 889 SW2d 794) and (criticized in Franklin v
Duncan (1995, ND Cal) 884 F Supp 1435) and (criticized in Tuttle v Utah (1995,
CA10 Utah) 1995 US App LEXIS 13623) and (criticized in Zuliani v State (1995,
Tex App Austin) 903 SW2d 812) and (criticized in Advanced Sys. Consultants v
Engineering Planning & Management (1995, DC Mass) 899 F Supp 832) and
(criticized in Freeman v Class (1995, DC SD) 911 F Supp 402) and (criticized in
Rupe v Marshall (1996, CA9 Cal) 1996 US App LEXIS 1639) and (criticized in
Dyson v Ylst (1996, ND Cal) 1996 US Dist LEXIS 2384) and (criticized in Peck v
United States (1997, CA2 Conn) 106 F3d 450) and (criticized in Dellums v Lindsey
(1998, ND Cal) 1998 US Dist LEXIS 13007) and (criticized in Hassine v
Zimmerman (1998, CA3 Pa) 160 F3d 941) and (criticized in Day v State (1999, Fla
App D1) 746 So 2d 1219, 25 FLW D 50) and (criticized in Johnson-Howell v
McKune (2000, CA10 Kan) 2000 Colo J C A R 1141) and (criticized in Hawkins v
Painter (2001, SD W Va) 136 F Supp 2d 569) and (criticized in State v Van Kirk
(2001) 2001 MT 184, 306 Mont 215, 32 P3d 735) and (criticized in Walker v
Jackson (2002, MD NC) 226 F Supp 2d 759).
Federal District Court properly applies federal forum non conveniens rule rather than
state rule in diversity action, since forum non conveniens is rule of venue, not rule of
decision. Sibaja v Dow Chemical Co. (1985, CA11 Fla) 757 F2d 1215, reh den, en
banc (1985, CA11 Fla) 765 F2d 154 and cert den (1985) 474 US 948, 88 L Ed 2d
294, 106 S Ct 347.
Pre-litigation notice requirement of Maine Health Security Act is intimately bound
up with rights and obligations of parties to Maine medical malpractice claims and
therefore must be applied in diversity action, notwithstanding that it does not
mandate arbitration or panel review. Houk v Furman (1985, DC Me) 613 F Supp
1022.
2.Evidentiary Matters
286. Generally
State statute making admissible copies of records of United States Land Office when
certified by register was binding in trial of ejectment suit in federal court in that
state. Best v Polk (1873) 85 US 112, 18 Wall 112, 21 L Ed 805.
Rules of evidence established by highest court of state in absence of state statute
were as binding on federal court as rules of evidence established by state statute.
American Agricultural Chemical Co. v Hogan (1914, CA1 Mass) 213 F 416; Myers
v Moore-Kile Co. (1922, CA5 Tex) 279 F 233, 25 ALR 1; Aetna Life Ins. Co. v
Kelley (1934, CA8 Mo) 70 F2d 589, 93 ALR 471; Virginia Beach Bus Line v
Campbell (1934, CA4 NC) 73 F2d 97, cert den (1935) 294 US 727, 79 L Ed 1258,
55 S Ct 637.
142
If there was any inconsistency in opinions of state court with respect to admission or
rejection of evidence, it was duty of federal court to follow latest adjudications.
Alexander v Missouri State Life Ins. Co. (1933, CA7 Ill) 68 F2d 1, cert den (1934)
292 US 650, 78 L Ed 1499, 54 S Ct 865.
In insurer's action to cancel policy for fraud in application, admissibility of
photostatic copy of application was governed by law of state in which application
was made. Freedom Casket Co. v New York Life Ins. Co. (1937, CA3 Pa) 88 F2d
833, cert den (1937) 301 US 693, 81 L Ed 1349, 57 S Ct 795.
In suits involving title to land, federal court had to follow state rules as to evidence.
Collins v Streitz (1938, CA9 Ariz) 95 F2d 430, cert den (1938) 305 US 608, 83 L Ed
387, 59 S Ct 67.
Where patent infringement suit was pending in Michigan and testimony was taken in
Pennsylvania on legal holiday, under Pennsylvania law, this was no reason for
suppressing testimony. American Automotoneer Co. v Porter (1913, DC Mich) 205
F 105, mod (1916, CA6 Mich) 232 F 456.
Where state court held that it would not look to journals as evidence for purpose of
whether or not statute in question was constitutionally passed, it was duty of federal
court to follow same procedure. Comstock v Tracey (1891, CCD Minn) 46 F 162.
State court's construction of state statute relating to admissibility of applications for
insurance policies as evidence was binding on federal court. Albro v Manhattan L.
Ins. Co. (1902, CCD Mass) 119 F 629, affd (1904, CA1 Mass) 127 F 281, cert den
(1904) 194 US 633, 48 L Ed 1159, 24 S Ct 857.
287. Burden of proof
Federal rule as to burden of proving contributory negligence prevailed irrespective
of rule in state courts. Dunagan v Appalachian Power Co. (1928, CA4 W Va) 23 F2d
395.
In diversity actions, burden of proof is substantive; hence, federal court must apply
state law. Aetna Ins. Co. v Getchell Steel Treating Co. (1968, CA8 Minn) 395 F2d
12; Product Promotions, Inc. v Cousteau (1974, CA5 Tex) 495 F2d 483, 18 FR Serv
2d 1102.
288. Dead man's statute
Massachusetts statute, as construed by Massachusetts court, concerning use of
statements of decedent, was binding on federal court in Massachusetts. American R.
Express Co. v Rowe (1926, CA1 Mass) 14 F2d 269, cert den (1927) 273 US 743, 71
L Ed 869, 47 S Ct 336; Small v Heywood-Wakefield Co. (1936, DC Mass) 13 F
143
Supp 825, affd (1937, CA1 Mass) 87 F2d 716, cert den (1937) 301 US 698, 81 L Ed
1353, 57 S Ct 925.
289. Parol
Parol evidence rule of state was binding on federal court. Chicago Fire & Marine
Ins. Co. v Hyde Park Congregational Church (1929, CA8 Mo) 35 F2d 73; Lawson v
Twin City Fire Ins. Co. (1932, DC Ky) 2 F Supp 171. Contra, Hartford Fire Ins. Co.
v Nance (1926, CA6 Ohio) 12 F2d 575.
290. Presumptions
State court decisions with respect to presumption of death from absence was
followed in federal court. Wiggins v New York Life Ins. Co. (1932, DC Ky) 2 F
Supp 365.
291. Prima facie evidence
Georgia statute providing that endorsements on notes were prima facie evidence that
they were so endorsed by proper party controlled federal court in that state. M'Niel v
Holbrook (1838) 37 US 84, 12 Pet 84, 9 L Ed 1009.
292. Privilege
West Virginia statute providing that husband could not be examined for or against
his wife, or wife for or against her husband, except in action or suit between husband
and wife, was binding on federal court in West Virginia in trial of ejectment suit,
wherein defendant offered his wife as witness. Lucas v Brooks (1873) 85 US 436, 18
Wall 436, 21 L Ed 779.
293. Witnesses
Ohio statute declaring that no person would be disqualified as witness in any civil
action or proceedings by reason of his interest in event of same governed civil
actions at law in United States courts in Ohio. Haussknecht v Claypool (1862) 66 US
431, 1 Black 431, 17 L Ed 172; Wright v Bales (1863) 67 US 535, 2 Black 535, 17 L
Ed 264; Ryan v Bindley (1864) 68 US 66, 1 Wall 66, 17 L Ed 559.
In action in New Hampshire to enforce liability of stockholders of English
corporation, court properly permitted expert to testify as to English law and also
properly received copies of statutes made by official English printer and identified
by such expert, though it was contended that New Hampshire law only permitted
oral testimony and did not authorize reception of such copies of statutes. Nashua
Sav. Bank v Anglo-American Land, Mortg. & Agency Co. (1903) 189 US 221, 47 L
Ed 782, 23 S Ct 517.
144
Where Congress had legislated on subject of competency of witnesses in courts of
United States, state statutes and decisions had no application. Travis v Nederland L.
Ins. Co. (1900, CA8 Iowa) 104 F 486.
Highest state court's construction of state statute relating to competency of witnesses
and admissibility of their testimony was controlling on federal court. New York Life
Ins. Co. v Cross (1934, DC NY) 7 F Supp 130.
3.Judgments
294. Generally
Effect which federal court gave to prior adjudications of state courts was matter of
state law. Atchison, T. & S. F. R. Co. v A. B. C. Fireproof Warehouse Co. (1936,
CA8 Mo) 82 F2d 505, cert den (1936) 299 US 555, 81 L Ed 409, 57 S Ct 17; NevCal Electric Sec. Co. v Imperial Irr. Dist. (1936, CA9 Cal) 85 F2d 886, cert den
(1937) 300 US 662, 81 L Ed 871, 57 S Ct 493.
Whether district court properly refused to enter judgments for defendant on evidence
was to be determined by state law as enunciated by appellate courts of state.
Delaware & H. R. Corp. v Bonzik (1939, CA3 Pa) 105 F2d 341.
Court had to rely upon law of Ohio to determine regularity of Ohio judgment in
federal court. Moebius v McCracken (1933) 261 Mich 409, 246 NW 163.
295. Declaratory judgments
In action for declaratory judgment, based on diversity of citizenship, that insurer was
not liable on policy issued through agent in Indiana to Indiana resident, Indiana law
governs substantive questions. Potomac Ins. Co. v Stanley (1960, CA7 Ind) 281 F2d
775 (criticized in Cincinnati Ins. Co. v Irvin (1998, SD Ind) 19 F Supp 2d 906).
In diversity action in federal district court in Missouri for declaratory judgment that
insurer was not obligated to defend Missouri city in wrongful death action, Missouri
law controlled. Poplar Bluff v New Amsterdam Casualty Co. (1967, CA8 Mo) 386
F2d 172.
In diversity action brought by insured Georgia corporation against insurer for
declaratory judgment respecting policy coverage, Georgia law controls. Stevens
Industries, Inc. v Maryland Casualty Co. (1968, CA5 Ga) 391 F2d 411, cert den
(1968) 392 US 926, 20 L Ed 2d 1386, 88 S Ct 2285.
296. Default
On motion for relief from default judgment of federal court in South Carolina,
question of whether default judgment was void would be determined by South
Carolina law. Marquette Corp. v Priester (1964, DC SC) 234 F Supp 799, 9 FR Serv
2d 60B.29, Case 1.
145
State statute was taken in ascertaining effect of judgment by default, where case had
been discontinued. Brown v Van Braam (1797) 3 US 344, 3 Dall 344, 1 L Ed 629.
297. Dismissal of action
Although state court's unanimous decision dismissing negligence suit is not
controlling upon federal court, every consideration based upon comity and orderly
administration of law requires federal court to follow it in action between same
parties and upon same facts. Mearns v Central R.R. Co. (1905, CA2 NY) 139 F 543.
In diversity action in federal district court in Florida, whether defendant's motion to
dismiss had merit would be determined by Florida law. Sagesser v Sears, Roebuck &
Co. (1956, CA5 Fla) 230 F2d 806.
Rule 41(b) of Federal Rules of Civil Procedure, not California Code of Civil
Procedure § 583(b), governs dismissals for lack of prosecution in diversity suits in
federal court. Olympic Sports Products, Inc. v Universal Athletic Sales Co. (1985,
CA9 Cal) 760 F2d 910, 1 FR Serv 3d 1562, cert den (1986) 474 US 1060, 88 L Ed
2d 780, 106 S Ct 804.
298. Summary judgment
While substantive law of Wyoming must be applied to merits of libel and slander
claims presented in diversity action, it is not Wyoming law which controls handling
of motion for summary judgment; that is matter of federal procedural law. Ando v
Great Western Sugar Co. (1973, CA10 Wyo) 475 F2d 531.
Assuming correctness of plaintiffs interpretation of state court holding (i.e., that
holding mandates that all evidence be heard at trial prior to determining propriety of
punitive damages instruction and that court is therefore precluded from granting
partial summary judgment on issue of punitive damages in bad faith insurance case),
such rule would be viewed as procedural and thus not binding on federal court in
diversity action. O'Connor v Equitable Life Assurance Soc. (1984, ND Miss) 592 F
Supp 595.
299. Enforcement of judgment, execution
Construction given by state court to bond for stay of execution was controlling in
federal court. United States Fidelity & Guaranty Co. v Whittaker (1925, CA9 Mont)
8 F2d 455, cert den (1926) 270 US 653, 70 L Ed 782, 46 S Ct 352.
Illinois statutes providing for redemption from various judicial sales constituted rule
of property binding on federal chancery courts. American Mine Equipment Co. v
Illinois Coal Corp. (1929, CA7 Ill) 31 F2d 507, cert den (1929) 280 US 572, 74 L Ed
624, 50 S Ct 29.
146
Nature of interest in real property, and liability of same to execution, was determined
by laws of state. In re Martin (1931, CA6 Tenn) 47 F2d 498.
Effect of sheriff's sale was determined by laws of state. Glenn v Hollums (1935,
CA5 Tex) 80 F2d 555.
Arkansas statute providing that judicial sales of personal property would be on credit
of three months, and sales of real property on credit of not less than three or more
than six months, was rule of property binding on federal court sitting in such state
and ordering sale of two bridges. O'Connor v Townsend (1937, CA8 Ark) 87 F2d
882.
300. Interest and penalties
Federal court could not enforce payment of penalty imposed by state law, in addition
to money due on execution. Gwin v Barton (1847) 47 US 7, 6 How 7, 12 L Ed 321.
Employee recovering minimum wages and liquidated damages under Fair Labor
Standards Act was not entitled to interest on sums so recovered; question was one of
federal, not local law. J. F. Fitzgerald Constr. Co. v Pedersen (1945) 324 US 720, 89
L Ed 1316, 65 S Ct 892, 9 CCH LC P 51198.
Matter of interest on judgments entered in federal court was controlled by law of
state in which federal court was sitting. Women's Catholic Order of Foresters v
Special School Dist. (1939, CA8 Ark) 105 F2d 716.
Where on appeal of action for treble damages based on federal antitrust laws court of
appeals reversed judgment in favor of plaintiff and remanded with instructions to
enter judgment for specified amount, plaintiff was not entitled to interest from date
of original judgment, and state law relative to interest was inapplicable. Milwaukee
Towne Corp. v Loew's Inc. (1952, CA7 Ill) 200 F2d 17, cert den (1953) 345 US 909,
97 L Ed 1345, 73 S Ct 650.
Mississippi statute which imposes mandatory 15 percent penalty on unsuccessful
appellant is applicable to diversity suit in federal court. Walters v Inexco Oil Co.
(1984, CA5 Miss) 725 F2d 1014.
In diversity cases, federal courts follow state law on question of prejudgment
interest. American Anodco, Inc. v Reynolds Metal Co. (1984, CA6 Mich) 743 F2d
417.
Law of state in which forum district is located determines whether court should
award prejudgment interest in interpleader action brought by trustee of fund
established by insurer to provide security for its American policyholders, where 8
individuals and corporations have made claims against fund which far exceed
amount on deposit, and where each has obtained judgment against insurer in court of
147
state other than state of forum district. Fidelity Bank v Commonwealth Marine &
General Assurance Co. (1984, ED Pa) 592 F Supp 513.
District Court properly applies state rule which adds to amount of compensatory
damages, as part of award, damages for delay at 10 percent per annum not
compounded, in admiralty case over which it has diversity jurisdiction. Monaghan v
Uiterwyk Lines, Ltd. (1985, ED Pa) 607 F Supp 1020.
301. Parties bound by judgment
Question of who was bound by judgments through aiding another's suit was
determined according to decisions of federal courts. Columbia Ins. Co. v Mart
Waterman Co. (1926, CA2 NY) 11 F2d 216, cert den (1926) 271 US 672, 70 L Ed
1144, 46 S Ct 486.
302. Res judicata and collateral estoppel
Retrospective laws of remedial character could be passed; but no legislative act
could change rights and liabilities of parties which had been established by solemn
judgment rendered by federal court. Massingill v Downs (1849) 48 US 760, 7 How
760, 12 L Ed 903.
Decisions of state courts reviewing commission orders making rates were res
judicata and could be pleaded in suits subsequently brought in federal courts to
enjoin their enforcement. State Corp. Com. v Wichita Gas Co. (1934) 290 US 561,
78 L Ed 500, 54 S Ct 321.
Federal common law as to res judicata, rather than law of forum state, applies in
bankruptcy proceedings. Heiser v Woodruff (1946) 327 US 726, 90 L Ed 970, 66 S
Ct 853, reh den (1946) 328 US 879, 90 L Ed 1647, 66 S Ct 1335.
Judgment of state court had, in federal court, only such effect as res judicata as was
given it under laws of state. Speakman v Bernstein (1932, CA5 La) 59 F2d 523.
State law controls application of collateral estoppel in diversity case. Hackler v
Indianapolis & Southeastern Trailways, Inc. (1971, CA6 Ky) 437 F2d 360, 19 ALR
Fed 705.
Federal court sitting in diversity properly applies federal law when determining
preclusive effect of prior federal diversity judgment. Aerojet-General Corp. v Askew
(1975, CA5 Fla) 511 F2d 710, reh den (1975, CA5 Fla) 514 F2d 1072 and cert den
and app dismd (1975) 423 US 908, 46 L Ed 2d 137, 96 S Ct 210, reh den (1975) 423
US 1026, 46 L Ed 2d 400, 96 S Ct 470.
Federal law of issue preclusion is applicable when both prior case and instant case
are based on diversity of citizenship. Clay v Johns-Manville Sales Corp. (1983, CA6
148
Tenn) 722 F2d 1289, CCH Bankr L Rptr P 69507, CCH Prod Liab Rep P 9855, 14
Fed Rules Evid Serv 1205, cert den (1984) 467 US 1253, 82 L Ed 2d 842, 104 S Ct
3537 and (criticized in Wyatt v A-Best Prods. Co. (1995, Tenn App) CCH Prod Liab
Rep P 14433).
State court judgment was not res judicata as to whether statute violated United States
Constitution. Garland Co. v Filmer (1932, DC Cal) 1 F Supp 8.
Where suits in federal and state courts were legally identical in parties, subject
matter, issues, and relief, and state suit was in final decree and state court
continuously controlled property involved and administered it in order to execute its
decree, state court's decree was res judicata in federal court. Sain v Montana Power
Co. (1937, DC Mont) 20 F Supp 843.
Federal court sitting in diversity looks to state's law of collateral estoppel to
determine effect of prior state court judgment. Alsup v Spratt (1983, ND Ind) 577 F
Supp 557, affd (1985, CA7 Ind) 768 F2d 879.
Federal court sitting in diversity is free to apply federal law in determining scope and
effect of prior federal diversity judgment. Harrison v Celotex Corp. (1984, ED Tenn)
583 F Supp 1497.
In diversity suit in equity to set aside or deny res judicata effect to state court
judgment, federal District Court must apply law of state which rendered judgment.
Ahrens v Katz (1984, ND Ga) 595 F Supp 1108.
4.Limitation of Actions
a.In General
303. Generally
Statute of limitations of another state was not available as defense unless such
defense was specially pleaded. Gormley v Bunyan (1891) 138 US 623, 34 L Ed
1086, 11 S Ct 453.
Action on judgment of federal court was subject to statute of limitations of state in
which judgment was rendered. Metcalf v Watertown (1894) 153 US 671, 38 L Ed
861, 14 S Ct 947 (superseded by statute as stated in Gelb v Royal Globe Ins. Co.
(1986, CA2 NY) 798 F2d 38) and (superseded by statute as stated in Butcher v
Truck Ins. Exchange (2000, 6th Dist) 77 Cal App 4th 1442, 92 Cal Rptr 2d 521,
2000 CDOS 974, 2000 Daily Journal DAR 1367).
Limitations are governed by law of forum, and not by law of place where event
happened, which gave rise to suit. Union P. R. Co. v Wyler (1895) 158 US 285, 39 L
Ed 983, 15 S Ct 877.
149
Decision of highest court of state to effect that when railroad company failed to
designate person on whom service could be had in state, as required by constitution
of state and acts of legislature thereof, company could not plead statute of limitations
was binding on federal courts in that state. Quinette v Pullman Co. (1916, CA8
Okla) 229 F 333.
Federal court of equity did not follow state limitation law if manifest wrong would
result. Schindler v Spackman (1926, CA8 SD) 16 F2d 45.
Whether statute of limitations was defense to claim for balance due on notes was
determined by law of forum. Otis v Bennett (1937, CA3 Pa) 91 F2d 531, cert den
(1937) 302 US 727, 82 L Ed 561, 58 S Ct 48.
Where Congress has not otherwise provided, suit in federal court is governed by
statute of limitations which would apply to similar or analogous claim brought in
state proceeding. Warner v Perrino (1978, CA6 Ohio) 585 F2d 171, 11 Ohio Ops 3d
274.
Federal Court, sitting in diversity, follows forum's choice of law rules to determine
applicable statute of limitations. Ross v Johns-Manville Corp. (1985, CA3 Pa) 766
F2d 823, CCH Prod Liab Rep P 10592.
Federal courts enforced limitation statute of state in which action was brought to
enforce liability of stockholder of foreign banking corporation. Hillmer v Anderson
(1936, DC NY) 15 F Supp 457.
For sake of uniformity, federal courts accepted state statutes of limitation whenever
by so doing they were not required to abrogate their own principles. Seelig v First
Nat'l Bank (1936, DC Ill) 20 F Supp 61.
Where neither 42 USCS § 1981 nor § 1985(3) provided limitations for causes of
action which they created, federal courts would look to most nearly analogous state
statute of limitations in order to determine time within which cause of action may be
commenced. Ripp v Dobbs Houses, Inc. (1973, ND Ala) 366 F Supp 205, 6 BNA
FEP Cas 566, 6 CCH EPD P 8840, amd (1973, ND Ala) 6 BNA FEP Cas 1327.
Absent applicable federally created statute of limitation, appropriate state statute
generally controls under Rules of Decision Act (28 USCS § 1652), and this is true
even where individual brings suit to seek protection of federally created civil right.
EEOC v Eagle Iron Works (1973, SD Iowa) 367 F Supp 817, 6 BNA FEP Cas 1077,
7 CCH EPD P 9059, 18 FR Serv 2d 18.
Rule that it remained with federal judges to construe, and in proper case reject, any
subordinate provision in state statutes which would unwisely encumber
administration of law, applied to statutes of limitations. Salisbury v Bennett (1896,
CCD NY) 72 F 743.
150
304. Commencement of limitation period
Commencement of applicable state statute of limitations would be determined by
decisions of courts of such state. Arkansas Fuel Oil Co. v Blackwell (1936, CA10
Okla) 87 F2d 50.
Whether action accrued before demand was made, as regarded statute of limitations,
was question not to be decided by federal court in accordance with views of state's
supreme court unless such was found to be general law. Williams v Drake (1935, DC
Ill) 9 F Supp 672.
305. Commencement of suit
As general rule, time for commencement of action at law in federal court was
governed by state statutes of limitations, in absence of any controlling act of
Congress, and federal court gave such statutes same construction and operation
given by highest court of the state. Leffingwell v Warren (1862) 67 US 599, 2 Black
599, 17 L Ed 261; Tioga Railroad v Blossburg & C. Railroad (1874) 87 US 137, 20
Wall 137, 22 L Ed 331; Bauserman v Blunt (1893) 147 US 647, 37 L Ed 316, 13 S
Ct 466; Balkam v Woodstock Iron Co. (1894) 154 US 177, 38 L Ed 953, 14 S Ct
1010; In re Connaway (1900) 178 US 421, 44 L Ed 1134, 20 S Ct 951; McClaine v
Rankin (1905) 197 US 154, 49 L Ed 702, 25 S Ct 410.
Kansas statute, providing that, for purpose of statute of limitations, action was not
deemed commenced until summons was served, barred Kansas federal district court
diversity suit in which summons was not served until after statute of limitations had
expired, even though complaint was filed within statutory period. Ragan v
Merchants Transfer & Warehouse Co. (1949) 337 US 530, 93 L Ed 1520, 69 S Ct
1233, reh den (1949) 338 US 839, 94 L Ed 513, 70 S Ct 33.
In suit on war risk insurance policy court, after holding state statute of limitations
applicable, considered state statutory provisions on what constitutes commencement
of action, and stated that it felt that time of service of copy of petition upon United
States district attorney should determine time when action was commenced under
laws of South Dakota. Walton v United States (1934, CA8 SD) 73 F2d 15.
Where limitation period on personal injury action in federal court in Illinois expired
on May 21, 1935, and summons was dated May 23, 1935, and minutes of clerk
showed issuance on May 23, and marshal's minutes showed receipt on May 23,
motion to dismiss was sustained, though plaintiff contended it was actually issued on
May 21, 1935, and chief deputy clerk made affidavit that summons was issued on
May 21. Karnes v Keck (1935, DC Ill) 11 F Supp 577.
306. Construction of state limitations statutes
151
Even though federal court had construed state statute of limitations in certain way,
later contrary construction by highest state court would be followed in federal courts.
Bauserman v Blunt (1893) 147 US 647, 37 L Ed 316, 13 S Ct 466.
State statutes of limitations had to give plaintiff reasonable time to sue; otherwise,
they were declared unconstitutional and were not applied. Campbell v Haverhill
(1895) 155 US 610, 39 L Ed 280, 15 S Ct 217 (criticized in Welch v Cadre Capital
(1989, DC Conn) 1989 US Dist LEXIS 17039) and (superseded by statute as stated
in Hughes Aircraft Co. v National Semiconductor Corp. (1994, ND Cal) 850 F Supp
828).
It was quite immaterial that state statute only prescribe rule of limitation for actions
brought in court of state. Fearing v Glenn (1896, CA2 NY) 73 F 116.
Where state decisions were in confusion as to applicable limitations, federal court
determined matter unaided by state decision. Crawford County Trust & Sav. Bank v
Crawford County (1933, CA8 Iowa) 66 F2d 971, cert den (1934) 291 US 664, 78 L
Ed 1055, 54 S Ct 439.
In order to determine applicability of statute of limitations, such as that of Delaware,
which was in terms of common-law actions, to civil action brought in federal district
court, it was necessary for court through consideration of nature of cause of action
disclosed in complaint to determine form of action which would have been brought
upon it at common law. Williamson v Columbia Gas & Electric Corp. (1939, CA3
Del) 110 F2d 15, cert den (1940) 310 US 639, 84 L Ed 1407, 60 S Ct 1087.
State court decisions had to be followed by federal court in interpretation of state
statute of limitations. Pickett v Aglinsky (1940, CA4 W Va) 110 F2d 628.
Application of Iowa statute of limitations, which required actions for wages or for
liability or penalty for failure to pay wages to be brought within two years, but
requiring existing causes of action to be brought within six months after effective
date of statute, to actions under Fair Labor Standards Act was not invalid as attempt
to discriminate against rights arising under federal law. Kendall v Keith Furnace Co.
(1947, CA8 Iowa) 162 F2d 1002, 13 CCH LC P 63949.
When no Federal Rule is implicated and question is whether state law or judge-made
federal law is controlling in action founded on diversity jurisdiction, reference is
properly made not to Rules Enabling Act (28 USCS § 2072) but to Rules of Decision
Act (28 USCS § 1652), and United States Court of Appeals would accordingly
utilize state statute (Uniform Certification of Questions of Law Act, Maryland
Courts and Judicial Procedure Code Annotated § 12-601) by requesting state Court
of Appeals to submit opinion on whether statute of limitations prescribed by state
statute was suspended during pendency of motion to intervene in civil action in
United States District Court for District of Columbia. Walko Corp. v Burger Chef
152
Systems, Inc. (1977, App DC) 180 US App DC 306, 554 F2d 1165, 23 FR Serv 2d
8.
307. Federal laws
State statute permitted bringing of new action within specified time after failure of
timely prior action for reason other than on merits, notwithstanding expiration of
limitations period, is applicable to suit in federal court to enforce federally created
right for which no federal limitations period was prescribed. Smith v McNeal (1883)
109 US 426, 27 L Ed 986, 3 S Ct 319.
Rights of action acquired by virtue of laws of United States as between private
parties were subject to state statute of limitations. Campbell v Haverhill (1895) 155
US 610, 39 L Ed 280, 15 S Ct 217 (criticized in Welch v Cadre Capital (1989, DC
Conn) 1989 US Dist LEXIS 17039) and (superseded by statute as stated in Hughes
Aircraft Co. v National Semiconductor Corp. (1994, ND Cal) 850 F Supp 828);
McClaine v Rankin (1905) 197 US 154, 49 L Ed 702, 25 S Ct 410.
Determination of time of accrual of cause of action to enforce federally created right
is federal question. Rawlings v Ray (1941) 312 US 96, 85 L Ed 605, 61 S Ct 473;
Cope v Anderson (1947) 331 US 461, 91 L Ed 1602, 67 S Ct 1340, 36 Ohio Ops
398.
Since there was no federal statute of limitations limiting time in which shareholders'
liability in national bank could be enforced, local law of limitations was applicable.
Cope v Anderson (1947) 331 US 461, 91 L Ed 1602, 67 S Ct 1340, 36 Ohio Ops
398.
Where Congress had enacted statute of limitation as to cause of action created by it,
there was no room for application of statute of limitation prescribed by state. United
States use of Gibson Lumber Co. v Boomer (1910, CA8 Colo) 183 F 726.
Limitation prescribed in 49 USCS § 16(3)(b) was applicable to action based on
failure to furnish cars where discrimination was not relied upon, and state statutes of
limitations had no application. Louisville & N. R. Co. v Cory (1931, CA6 Tenn) 54
F2d 8.
Where limitation was provided by federal statute, state statutes of limitation and
decisions of state courts construing them had no application. Port v Litolff (1939,
CA5 La) 103 F2d 302.
Where statute and rule on which relief is sought (15 USCS §§ 78a et seq. in which
right to relief is claimed under § 10(b) of Securities Exchange Act and Rule 10b-5
promulgated thereunder) contain no statute of limitations, federal policy is to adopt
appropriate local law of limitations; any limitations period chosen must be one
which best effectuates federal policies underlying federal securities laws. Nickels v
153
Koehler Management Corp. (1976, CA6 Ohio) 541 F2d 611, CCH Fed Secur L Rep
P 95719, cert den (1977) 429 US 1074, 50 L Ed 2d 792, 97 S Ct 813.
Provision of Transportation Act, prohibiting carriers from requiring more than 90
days for presentation of claims and more than two years for commencing suits
growing out of Interstate Commerce Act, was limitation law governing where
stipulated in bills of lading for interstate shipments. Hartness v Iberia & V. R. Co.
(1924, DC La) 297 F 622.
308. Tolling or extension of limitation periods
State enactment providing for tolling of limitations period during absence of
defendant who departed from and resided out of state was applicable in action under
federal law to recover customs duties and fees alleged to have been illegally exacted
by federal port collector. Barney v Oelrichs (1891) 138 US 529, 34 L Ed 1037, 11 S
Ct 414.
Federal causes of action are governed by federal decisional law of laches. Holmberg
v Armbrecht (1946) 327 US 392, 90 L Ed 743, 66 S Ct 582, 162 ALR 719 (criticized
in Ashafa v City of Chicago (1998, CA7 Ill) 146 F3d 459).
State law as to tolling of state statute of limitations applies to claims based on state
law. Ragan v Merchants Transfer & Warehouse Co. (1949) 337 US 530, 93 L Ed
1520, 69 S Ct 1233, reh den (1949) 338 US 839, 94 L Ed 513, 70 S Ct 33.
Kentucky statute extending limitations for three months where action was dismissed
for want of jurisdiction, applied to action brought in federal courts of Kentucky.
Merko v Sturm & Dillard Co. (1916, CA6 Ky) 233 F 68, cert den (1916) 242 US
630, 61 L Ed 536, 37 S Ct 14.
State decision construing statute providing for time for commencement of new suits
after former suits failed other than on merits was controlling in federal court. Young
v Alexander (1928, CA8 Kan) 29 F2d 555.
In civil rights case, state, rather than federal, tolling provision governs as to legal
disability of state prisoners. Miller v Smith (1980, CA5 Tex) 615 F2d 1037.
Pendency of suit in state court, dismissed for want of prosecution, did not extend
period for suit in admiralty where no application was made to state court to revive
suit therein; and inclusion of claim for damage to decedent's vessel, as to which
limitation was six years, would not avail plaintiff in admiralty where he was guilty
of laches in commencing new suit after discovery of missing evidence, more than six
years having elapsed. Tesoriero v Erie R. Co. (1934, DC NY) 6 F Supp 815.
Decision of intermediate appellate state court on whether action commenced for
wrongful death, but dismissed for misjoinder of parties, interrupted running of
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statute of limitations was not binding on federal court. Brandon v Kansas City S. R.
Co. (1934, DC La) 7 F Supp 1008.
b.In Particular Actions
309. Generally
Statutes of limitations of state governed personal actions in federal courts. Michigan
Ins. Bank v Eldred (1889) 130 US 693, 32 L Ed 1080, 9 S Ct 690.
State statute of limitations was binding on federal courts only in trial of actions at
law. Davis v Smokeless Fuel Co. (1912, CA2 NY) 196 F 753, cert den (1913) 229
US 617, 57 L Ed 1353, 33 S Ct 777.
State limitation law controlled in transitory actions in federal court. McAvey v
Emergency Fleet Corp. (1926, DC Mass) 15 F2d 405.
310. Admiralty
In absence of showing of exceptional circumstances, court of admiralty was
governed by state statute of limitations in determining question of laches. Westfall
Larson & Co. v Allman-Hubble Tug Boat Co. (1934, CA9 Wash) 73 F2d 200; The
Kermit (1934, DC Cal) 6 F Supp 113, affd (1935, CA9 Cal) 76 F2d 363, cert den
(1935) 296 US 581, 80 L Ed 411, 56 S Ct 93.
Doctrine of laches could be invoked in admiralty independently of any statute of
limitation. The Kermit (1935, CA9 Cal) 76 F2d 363, cert den (1935) 296 US 581, 80
L Ed 411, 56 S Ct 93.
State statute of limitations was no defense in court of admiralty unless laches were
shown. Carroll v Central R. Co. (1926, DC NY) 14 F2d 529.
Admiralty could apply state statute of limitations. Stampalia v Murphy (1929, DC
Pa) 34 F2d 660.
State statute limiting action for wrongful death to two years was enforceable in
admiralty. Tesoriero v Erie R. Co. (1934, DC NY) 6 F Supp 815.
311. Antitrust
Periods of limitation prescribed by state law applied in civil suits under Antitrust Act
to be construed in light of federal decisions under act of Congress. Glenn Coal Co. v
Dickinson Fuel Co. (1934, CA4 W Va) 72 F2d 885; Winkler-Koch Engineering Co.
v Universal Oil Products Co. (1947, DC NY) 79 F Supp 1013, 79 USPQ 328.
Action to recover treble damages is action to recover statutory penalty; hence, twoyear state statute of limitations controls. Schiffman Bros. Inc. v Texas Co. (1952,
CA7 Ill) 196 F2d 695.
155
Suits for treble damages under 15 USCS §§ 15 and 18 were governed by statute of
limitations of state where suit was brought. Williamson v Columbia Gas & Electric
Corp. (1939, DC Del) 27 F Supp 198, affd (1939, CA3 Del) 110 F2d 15, cert den
(1940) 310 US 639, 84 L Ed 1407, 60 S Ct 1087.
Where action for treble damages under Antitrust Act was brought in federal district
court in Massachusetts, cause of action which accrued more than six years before
action was begun was barred by Massachusetts statute of limitations relating to torts.
Momand v Universal Film Exchange, Inc. (1942, DC Mass) 43 F Supp 996.
Treble damages for alleged violation of Antitrust Act are not in nature of penalty or
forfeiture, but are compensatory damages, and action therefore is governed as to
limitation by statute of state. Greene v Lam Amusement Co. (1956, DC Ga) 145 F
Supp 346.
312. Bankruptcy
State statute of limitations governed as to claims in bankruptcy. In re GermanAmerican Improv. Co. (1924, CA2 NY) 3 F2d 572.
313. Banks
Statutory double liability of national bank shareholders is governed by state statute
of limitation rather than common-law doctrine of laches, although federal law
governs as to when limitations period begins to run. Rawlings v Ray (1941) 312 US
96, 85 L Ed 605, 61 S Ct 473; Fisher v Whiton (1942) 317 US 217, 87 L Ed 223, 63
S Ct 175; Cope v Anderson (1947) 331 US 461, 91 L Ed 1602, 67 S Ct 1340, 36
Ohio Ops 398.
State statute of limitations was applicable to suit brought by receiver of national
bank against stockholders to recover stock assessments. Reich v Van Dyke (1939,
CA3 Pa) 107 F2d 682.
Suit against directors of national bank was governed by state statute of limitations.
Anderson v Anderson (1927, DC Ga) 23 F2d 331, affd (1928, CA5 Ga) 28 F2d
1007, cert den (1929) 279 US 845, 73 L Ed 990, 49 S Ct 265.
314. Civil rights
When 42 USCS § 1983 is given shorter limitation period than any state cause of
action, offending state statute of limitations unconstitutionally discriminates against
federal cause of action and must be disregarded in determining applicable statute of
limitations. Matthewman v Akahane (1983, DC Hawaii) 574 F Supp 1510.
315. Contracts
156
In action by architect against receiver of national bank to recover for preparation of
plans, state statute of limitations covering actions founded on contract, as interpreted
by state courts, was applicable. Janssen v Bank of Pittsburgh Nat'l Asso. (1940, CA3
Pa) 115 F2d 19.
316. Copyrights, patents and trademarks
Actions at law for infringement of copyright were governed by limitation law of
state. McCaleb v Fox Film Corp. (1924, CA5 La) 299 F 48.
State statute of limitations was not applicable to suit for infringement of patent. May
v Buchanan County (1886, CCD Iowa) 29 F 469; May v Board of Comm'rs (1887,
CCD Ohio) 30 F 250; McGinnis v Erie County (1890, CCD Pa) 45 F 91; California
Artificial Stone Paving Co. v Starr (1891, CCD Cal) 48 F 560.
317. Customs duties
In action against collector of customs duties to recover duties illegally executed,
state statute of limitation was not applicable. Arnson v Murphy (1883) 109 US 238,
27 L Ed 920, 3 S Ct 184, 4 AFTR 4611.
318. Equity
While federal court of equity was free to disregard state statute of limitations, it did
so only where there were exceptional circumstances which would render its
application inequitable. Bell v John H. Giles Dyeing Mach. Co. (1930, CA3 Pa) 37
F2d 482; Johnson v White (1930, CA8 Ark) 39 F2d 793; Johnson v Umsted (1933,
CA8 Ark) 64 F2d 316; Crawford County Trust & Sav. Bank v Crawford County
(1933, CA8 Iowa) 66 F2d 971, cert den (1934) 291 US 664, 78 L Ed 1055, 54 S Ct
439; Winget v Rockwood (1934, CA8 Minn) 69 F2d 326; United Light & Power Co.
v Grand Rapids Trust Co. (1936, CA6 Mich) 85 F2d 331, cert den (1936) 299 US
591, 81 L Ed 436, 57 S Ct 118; Webb v American Surety Co. (1937, CA5 Fla) 88
F2d 171; Sale v World Oil Co. (1933, DC Tex) 6 F Supp 321, affd (1934, CA5 Tex)
69 F2d 667, cert den (1934) 292 US 648, 78 L Ed 1498, 54 S Ct 860.
In equity suit, plea of limitations was regarded as one asserting laches. Todd v
Russell (1932, DC NY) 1 F Supp 788.
Federal courts of equity were not precluded from either shortening or extending state
statute of limitations if peculiar circumstances so warranted. Abercrombie v United
Light & Power Co. (1934, DC Md) 7 F Supp 530.
State statute of limitations was not necessarily applicable to action that was
essentially equitable in nature. Todd v Russell (1935, DC NY) 20 F Supp 930.
157
It was generally recognized that federal equity courts, although not bound by state
statutes of limitation, would ordinarily be guided by them in passing on state claims.
Continental Illinois Nat'l Bank & Trust Co. v Best (1937, DC NY) 20 F Supp 80.
Federal courts, sitting in equity and exercising their concurrent jurisdiction, were
bound by statutes of limitations of states, and they were also bound by state statutes
of limitations particularly directed to specific cases falling within exclusive equity
jurisdiction. Wilson v Shores-Mueller Co. (1941, DC Iowa) 40 F Supp 729.
319. Government insurance
State statutes of limitations were rendered inapplicable by act of Congress approved
May 29, 1928, which allowed suits to be brought on policies of war risk insurance
within six years after right accrued. Grigg v United States (1928) 277 US 582, 72 L
Ed 998, 48 S Ct 600.
State statute of limitations was applicable to action on war risk insurance policy.
Walton v United States (1934, CA8 SD) 73 F2d 15.
United States could invoke state statute limiting time in which action could be
revived after death of plaintiff in action on war risk insurance policy. Craig v United
States (1937, CA10 Kan) 89 F2d 586.
320. Judgments
Limitation time for enforcement of judgments and time for suits on judgments was
property rule, not regulation of process, and included federal courts. Ross v Duval
(1839) 38 US 45, 13 Pet 45, 10 L Ed 51.
Under statute of Louisiana which required that suit for declaration of nullity of
judgment because of fraud had to be instituted within one year of discovery of fraud,
suit in federal court to set aside mortgage foreclosure sale on ground of fraud could
not be maintained when filed more than year after suit in state court which showed
full knowledge of supposed fraud. McCrory v Harp (1940, DC La) 31 F Supp 354.
State statute limiting time within which execution may issue on judgment was
controlling in federal courts. General Electric Co. v Hurd (1909, CCD Or) 171 F
984.
321. Labor matters
Action by seaman for double wages under 46 USCS § 596 was governed by state
statute of limitations. Buckley v Oceanic S.S. Co. (1925, CA9 Cal) 5 F2d 545.
If Congress has not provided for limitations for actions under Labor Management
Relations Act to vacate arbitration award, then in specific application of United
158
States Arbitration Act to actions concerning such collective bargaining agreements,
court must look to law of state to determine appropriate limitations'. Sine v
International Brotherhood of Teamsters (1981, CA4 Md) 644 F2d 997, 107 BNA
LRRM 2089, 91 CCH LC P 12672, cert den (1981) 454 US 965, 70 L Ed 2d 381,
102 S Ct 507, 108 BNA LRRM 2923, 92 CCH LC P 13048.
Action in federal district court in Maryland against railroad for injunction and
accounting of wages lost because of plaintiffs' alleged wrongful discharge by
defendant begun more than 19 years after alleged wrongful discharge was barred by
limitations and laches whether it was regarded as action at law or as suit in equity.
Barnhart v Western Maryland R. Co. (1941, DC Md) 41 F Supp 898, affd (1942,
CA4 Md) 128 F2d 709, 6 CCH LC P 61106, cert den (1942) 317 US 671, 87 L Ed
538, 63 S Ct 75.
Louisiana civil code, which included in classification of actions prescribed by one
year those resulting from offenses or quasi offenses, applied to actions for overtime
compensation under Fair Labor Standards Act, and plaintiff was also denied
"additional equal amount" where recovery of overtime compensation was barred.
Divine v Levy (1942, DC La) 45 F Supp 49, 5 CCH LC P 61018.
In action under Fair Labor Standards Act to recover unpaid overtime compensation,
recourse was had to state statute of limitations. Abram v San Joaquin Cotton Oil Co.
(1942, DC Cal) 46 F Supp 969, 6 CCH LC P 61266.
322. Loans
In action to enforce liability of shareholders of joint-stock land bank for its debts
under Federal Farm Loan Act, Federal Court of Appeals had properly followed
intermediate state appellate court decision holding that 3-year state statute of
limitations did not apply to suits such as this. Russell v Todd (1940) 309 US 280, 84
L Ed 754, 60 S Ct 527, reh den (1940) 310 US 658, 84 L Ed 1421, 60 S Ct 1091.
In action to recover money lent, state statute of limitations controlled. Barthel v
Stamm (1944, CA5 Ga) 145 F2d 487, cert den (1945) 324 US 878, 89 L Ed 1430, 65
S Ct 1926.
323. Public lands
State statutes of limitation had no application in suit by government to annul patents
issued in violation of rights of Indians. United States v Minnesota (1926) 270 US
181, 70 L Ed 539, 46 S Ct 298.
324. United States as party
159
Where United States, as assignee of deposit account of Russian government, sued for
balance due, action was barred by state statute of limitations which was applicable to
foreign sovereign. Guaranty Trust Co. v United States (1938) 304 US 126, 82 L Ed
1224, 58 S Ct 785 (superseded by statute as stated in S.E.R., Jobs for Progress, Inc. v
United States (1985, CA) 759 F2d 1, 32 CCF P 73354) and (criticized in Interpamil
GmbH v Collectibles, Inc. (1999, SD NY) 1999 US Dist LEXIS 17681).
Federal government was not bound, in suit upon judgment in its favor, by state
statute of limitations in absence of congressional intent. Schodde v United States
(1934, CA9 Idaho) 69 F2d 866.
United States, when made defendant, could avail itself of state statute fixing
limitation. Stanley v United States (1928, DC Tex) 23 F2d 870.
325. Veterans' benefits
Where Draft Act failed to fix time in which veteran could sue for damages for being
deprived of right of reinstatement to old job, statute of limitations applicable was
statute of limitations in state where cause of action arose. Walsh v Chicago Bridge &
Iron Co. (1949, DC Ill) 90 F Supp 322 (superseded by statute as stated in Stevens v
Tennessee Valley Auth. (1983, CA6 Tenn) 712 F2d 1047, 118 BNA LRRM 3201).
160