Burns Mortgage Co. v. Fried, 292 U.S. 487 (1934)
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Burns Mortgage Co. v. Fried
No. 786
Argued May 3, 1934
Decided May 28, 1934
292 U.S. 487
CERTIORARI TO THE CIRCUIT COURT OF APPEALS
FOR THE THIRD CIRCUIT
Syllabus
1. The Conformity Act, 28 U.S.C. 724, requires that the form of a law action in a federal court and the right in which it may be brought shall be determined by the local law, but it does not apply to substantive questions upon which the local procedure may depend. P. 492
2. Under the Rules of Decision Act, 28 U.S.C. 725, the applicable state statute furnishes the rule of decision for a federal court sitting within or outside of the state, and must be given the meaning and effect attributed to it by the highest court of the state, as if the state court’s decision was literally incorporated into the enactment. P. 493.
3. There is no valid distinction in this respect between an act which alters the common law and one which codifies or declares it, such as the Uniform Negotiable Instruments Law, nor between a statute prescribing rules of commercial law and one concerned with some other subject of narrower scope. Swift v. Tyson, 16 Pet. 1, considered; Watson v. Tarpley, 18 How. 517, 521, limited. P. 495.
4. The negotiability of a promissory note made and payable in Florida, held to depend upon the Florida Negotiable Instruments Law. P. 495.
5. In the absence of construction by the Florida court, it was the duty of the federal courts in this case (tried in Pennsylvania) to decide the question of negotiability according to the accepted canons and in the light of the decisions of the courts of other states with respect to the same sections of the Negotiable Instruments Law. P. 496.
6. Promissory notes provided for interest on the principal sum at the rate of 7% per annum from date until paid and for payment of interest semi-annually, and added that deferred interest payments should bear interest from maturity at 105 per annum, payable semi-annually. Held that the word "maturity" refers to the due dates of interest, and not to date for payment of principal; that there is therefore no ambiguity with respect to the rate of interest, and that the notes are negotiable. Pp. 496-497.
67 F.2d 352 reversed.
Certiorari, 291 U.S. 657, to review the affirmance of a judgment entered against the Burns Mortgage Company in its action on promissory notes made by Fried. The decision below went upon the ground that the notes were nonnegotiable, and that the company, as assignee, could not sue in Pennsylvania in its own name, but only as use plaintiff in the name of the payee.