Guaranty Trust Co. v. York

In Erie, the Supreme Court abandoned the doctrine of Swift and stated that, for multiple reasons, federal courts sitting in diversity should use state law for substantive issues.  Erie led to many questions, primarily this one:  How far did this rule go?  Was there anything that was NOT substantive?  In other words, were there any issues upon which federal, not state law, would govern in diversity cases?  Or is a federal diversity court supposed to follow state law on every issue, including, for example, the size and color of the paper used to file briefs?  If not, where was the line between issues governed by state versus federal law?  If this line were supposed to track the distinction between substance and procedure, what was "substance" versus "procedure"? What did those terms mean?  The Supreme Court had to provide a set of standards, a test, a framework, something!

Guaranty Trust Co. was the Supreme Court's first attempt.  As you will quickly see, this first attempt did not go well.  What test does this case articulate?  Why is it, as the Supreme Court itself later recognized, unworkable as a general matter?

The facts in this case are incomprehensible.  I have made multiple attempts to understand them, including by reviewing (on multiple occasions) the district and circuit court opinions. All of my attempts have failed.  I will explain more in class, but for now, this was an equity suit (you will understand what that means later in the course), with the federal district court sitting in diversity.  Federal equity law (meaning common law) did not provide a limitations period for this type of case.  State law did provide one, and if that state limitations period applied, the suit was time-barred. The Supreme Court thus had to decide the following question:  when no source of federal law (particularly no congressional statute) provides a limitations period for a state law cause of action, but state law does provide one, should the federal courts use federal law or state law?