GUARANTY TRUST CO. v. YORK, 326 U.S. 99

Summary

Petitioner trustee appealed reversal of a summary judgment that would have barred respondent noteholder's action for petitioner's breach of trust. The decision was reversed on grounds that a federal court sitting in diversity was not bound in equity by the state statute of limitations that barred the suit in the state court. The court noted that under the Erie Doctrine, in all cases where a federal court had jurisdiction solely because of diversity of citizenship, the outcome of the litigation in the federal court should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court. The doctrine required the federal diversity court to follow state law, and if the statute of limitations under state law barred recovery in a state court, the federal court could not afford recovery. The court reiterated that the source of substantive rights enforced by a federal diversity court was state law, and that this law determined ...