Swift v. Tyson

Narton and Keith fraudulently sold George Tyson (defendant) land they did not actually own, receiving a negotiable bill of exchange in payment, which they then transferred to John Swift (plaintiff) to satisfy a pre-existing debt they owed him; when Swift presented the bill for payment, Tyson refused, arguing the fraudulent transaction made it invalid. Swift claimed protection as a bona fide purchaser without notice of the fraud, but Tyson countered that a pre-existing debt could not qualify as valid consideration, meaning Swift was not truly a bona fide purchaser; New York court decisions had held that pre-existing debts did not qualify as valid consideration, though no New York constitutional provision or statute addressed the question, and applying that state common-law rule, the trial court ruled for Tyson. Swift's diversity suit reached the Supreme Court.