interstate commercial transactions except so far as they are modified by congressional enactment.”

The laws of the state regulating commerce, when the state is admitted to the Union, continue to regulate it even after its admission, and when, by such admission, it has surrendered the exclusive power to legislate upon that topic to the Federal Congress. The power to alter the existing law was given to Congress; but, until so altered, the law applicable to interstate commerce before the state became a member of the Union remains unchanged and applicable, although the future regulation of that commerce was transferred to the United States.

§ 32. Independent judgment of Federal courts as to state commercial law. The dual system under which the states are placed makes it possible for the state and Federal courts, sitting therein, to arrive at irreconcilable views of what the law of the state is upon certain questions, even where the Federal courts profess to administer the law of the state. The Federal courts follow the decisions of the state courts very generally, upon all matters of law except those involving rules of commercial jurisprudence. In such controversies they have adopted a unique rule, by which they hold that they will apply their own views of the commercial law.

The leading case (29) upon this subject arose in the Federal court for the state of New York. By the law of that state, the plaintiff was not a bona fide indorsee, for a valuable consideration, of a bill of exchange, the value he had given for it to the indorser being the mere surrender

(29) Swift v. Tyson, 16 Peters (U. S.), 1.

of a pre-existing claim he had against him. The court held that "a pre-existing debt does constitute a valuable consideration in the sense of the general rule already stated, as applicable to negotiable instruments."

§ 33. Same: Argument for this view. It was contended in that case that it was the duty of the Federal courts, by virtue of a Federal statute (30), to follow the decisions of the state court. The court answered this contention thus: "In all the various cases which have hitherto come before us for decision, this court has uniformly supposed that the true interpretation of the thirty-fourth section limited its application to state laws strictly local, that is to say, to the positive statutes of the state, and the construction thereof adopted by the local tribunals, and to rights and titles to things having a permanent locality, such as the rights and titles to real estate, and other matters immovable and intraterritorial in their nature and character. It never has been supposed by us that the section did apply, or was designed to apply, to questions of a more general nature, not at all dependent upon local statutes or local usages of a fixed and permanent operation, as, for example, to the construction of ordinary contracts, or other written instruments, and especially to questions of general commercial law, where the state tribunals are called upon to perform the like functions as ourselves, that is, to ascertain upon general reasoning and legal analogies, what is the true exposition of the contract or instrument, or what is the just rule furnished by the principles of commercial law to govern the case. And we

(30) Ch. 20, Section 34, Judiciary Act, passed in 1789.

have not now the slightest difficulty in holding that this section, upon its true intendment and construction, is strictly limited to local statutes and local usages of the character before stated, and does not extend to contracts and other instruments of a commercial nature, the true interpretation and effect whereof are to be sought, not in the decisions of the local tribunals, but in the general principles and doctrines of commercial jurisprudence." See the article on Constitutional Law, §§ 364-67, in Volume XII of this work.

§ 34. Possible differences of judicial opinion regarding state common law of interstate commerce. The courts, in passing upon a question pertaining to interstate commerce, such as the question of reasonable rates, are bound to the principle that the subject is not without law; and, further, that the law to be applied is the law that prevailed in the state in question at the time the state was added to the Union. What that law was may not always be uniformly decided by both the state and Federal courts. It is, however, the law of the state that is applied.

As said by the court in Smith v. Alabama (31): “There is no common law of the United States, in the sense of a national customary law, distinct from the common law of England as adopted by the several states, each for itself, applied as its local law, and subject to such alteration as may be provided by its own statutes. A determination in a given case of what that law is may be different in a court of the United States from that which prevails in the judicial tribunals of a particular state. This

(31) 124 U. S., 465.

arises from the circumstance that courts of the United States, in cases within their jurisdiction, where they are called upon to administer the law of the state in which they sit, or by which the transaction is governed, exercise an independent, though concurrent, jurisdiction, and are required to ascertain and declare the law according to their own judgment. This is illustrated by the case of Railroad Co. v. Lockwood (31a), where the common law prevailing in the state of New York, in reference to the liability of common carriers for negligence, received a different interpretation from that placed upon it by the judicial tribunals of the state; but the law as applied is none the less the law of that state."

§ 35. State criminal law upon Federal subjects also continues until changed by Congress. At common law it was a special crime to libel the king. The settlers of the colonies brought with them the common law of England. By that law it was a crime to publish a libel about the sovereign. In conformity with this rule of law, it was a crime at the time the states became a Union, in case they had in no way changed the common law, to publish a libel about a governor or ruler of a colony or state. By the formation of the Union, the colonies, and by the subsequent admission into the Union, the territories, surrendered to the national government the function of ruling their territory, with respect to interstate commerce, war, and other topics defined in the Constitution, and to another sovereign known as the President. It would seem to follow, logically, that if a person, in a state that recog

(31a) 17 Wall. 357.

nized it to be a crime to libel an executive, should libel the President, he would be as guilty of the crime defined by the state law as if Congress had expressly legislated upon the subject, but it would be a crime against the state.

§ 36. Same (continued). The offense would be one under a law by which the state was governed, before it became a part of the Union by a form of accession, and a law which the national government had not changed, but which is still a law when its distinctive subjects of jurisdiction are in any way affected. That it must be the law that existed before the territory was made a part of the Union, without any later statutory modification made by the state legislature must follow of necessity; for, after the cession of the territory, the state has no power to legislate as to topics ceded exclusively to the central government. As a consequence of the necessity that such law should have existed before the territory forming the state became a part of the Union, it follows also that if no such law making it criminal to libel a governor or other official existed at that time, the offense could not be committed against the President. And thus in some parts of the United States it would be a state crime to libel the national executive, while in others it would not, a result perfectly consistent with the nature of the relation between the state and central governments as to topics upon which Congress has taken no action. In no place, however, would it be a Federal crime, because until Congress acts, the law violated is only the pre-existing state law (31b). See Criminal Law, § 3, in Volume III of this work.

(31b) United States v. Hudson, 7 Cranch, 32.