Except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied in any case is the law of the state. Whether the law of the state shall be declared by its legislature in a statute or by its highest court in a decision is not a matter of federal concern. There is no federal general common law. Congress has no power to declare substantive rules of common law applicable in a state, whether they be local in their nature or general, be they commercial law or a part of the law of torts.
A man was hit by a door projecting from a train while he was walking along a railroad right of way. He filed a negligence action against the railroad company, seeking damages for injuries he sustained. The circuit court ruled in favor of the man, refusing to consider the railroad company’s claim that it was not liable for the injuries under state common law. It held that liability was a question of general law about which federal courts were free to render independent decisions. On appeal, with the United States Court of Appeals for the Second Circuit, the case was affirmed. The case was elevated on appeal to the Supreme Court of the United States.
In a liability suit, should the law of the state be applied instead of common law?
The Court held that there was no federal general common law, and that except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied by federal courts in any diversity case was the law of the state. The U.S. Constitution recognizes and preserves the autonomy and independence of the states in their legislative and judicial departments. Supervision over either the legislative or the judicial action of the states is in no case permissible except as to matters by the Constitution specifically authorized or delegated to the United States.