Swift v. Tyson

The Swift case made it possible for federal courts to attempt to create a uniform set of laws for commercial papers. The decision made it safe for persons engaged in interstate commerce to assign commercial paper, and the national economy grew. However, the decision had drastic, unintended consequences on the U.S. court system. The notion that a federal common law on commercial paper existed was illusory, as federal judges sitting on such cases merely decided cases based on their own particular views. Moreover, the decision encouraged "forum shopping," which is a search for the most favorable court to hear a case. For example, in Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab * Transfer Co. (1928), a taxi company wanted to contract with a bus company to provide exclusive service for the bus company's terminal. Realizing that such a contract was illegal under Kentucky law but not illegal under the law created by the area's federal courts, the company moved to Tennessee for the sole purpose of gaining diversity jurisdiction and ensuring that the case went to federal court. Such maneuvers allowed businesses to circumvent state laws. In 1938, after enduring years of criticism, the Swift decision was reversed and laid to rest by the High Court in Erie R. Co. v. Tompkins. The Swift decision's highest purpose--encouraging the formation of a uniform set of laws governing commercial transactions--was realized one-half century later by the National Conference of Commissioners on Uniform States Laws (NCCUSL). The first set of uniform rules crafted by the NCCUSL and intended for adoption by all the states was the Uniform Negotiable Instruments Act, published in 1896.