Federal courts hearing cases were bound to follow the statutory laws of states that they were asked to enforce, but not the state's common law. The goal was to encourage the development of a federal common law. (Overruled by Erie Railroad Co. v. Tompkins (1938)) Decided January 25, 1842. Opinion of the Court: Joseph Story → go there Overruled by Erie Railroad Co. v. Tompkins (1938). → go there Topic: Other. Swift v. Tyson, 41 U.S. 1 (1842), was a case brought in diversity in the Circuit Court for the Southern District of New York on a bill of exchange accepted in New York in which the Supreme Court of the United States determined that United States federal courts that heard cases brought under their diversity jurisdiction under the Judiciary Act of 1789 must apply statutory state laws when the state legislatures in question had spoken on the issue, but did not have to apply the state's common law if the state legislatures had not spoken on the issue. Wiki link