[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]


        Given Justice Story's construction of sect. 34 of the Judiciary Act,
his holder-in-due-course rule would be a law expounded by the federal court
based on general reasoning, legal analogies, and the principles of commercial
law.  This "law" would have a different status than state laws.  It would be
applied in the federal district court setting, where state laws concerning
written instruments would still be given effect in state courts.  I don't
believe that Justice Story is saying that this rule has a higher status than
the state law.  He is saying that the federal courts need not be bound by the
New York state law in this case but should instead be free to determine the
issue of the validity according to larger principles of commercial law.  He
derives this freedom from the Judiciary Act itself by saying that the state
laws that the federal courts must follow do not include "laws" regarding the
construction of contracts or other written instruments because he does not see
these as "laws" but as judicial interpretation on issues of validity.

        Justice Story comes to this conclusion by arguing the case itself on
the merits based on the utility of negotiable instruments themselves, and by
arguing that accepting the New York law would deprive people who take
negotiable instruments as payment for prior obligations of the status of bona
fide holders.  Justice Story seems to use the Judiciary Act and commercial
principles to form a result based argument in order to hold that pre-existing
debt is valuable consideration of a negotiable instrument.