UNITED STATES SUPREME COURT DECISIONS ON-LINE

A Kentucky railroad corporation made a contract with the plaintiff, a Tennessee corporation carrying on a transfer business at a city clubjuris

Page 276 U. S. 519

in Kentucky whereby it granted to plaintiff the exclusive privilege of going upon its trains, into its depot, and on its surrounding premises to solicit transportation of baggage and passengers, and assigned a plot of ground belonging to it for the use of plaintiff's taxicabs while awaiting the arrival of trains, the plaintiff, on its part, agreeing to render certain services and to make monthly payments. The term of the contract was for one year, to continue for consecutive yearly periods until terminated by either party on thirty days' notice. Plaintiff was the successor of a Kentucky transfer corporation of the same name which had had a like contract with the railroad company and which was dissolved after its shareholders had incorporated the plaintiff and caused the property and business to be transferred to it. The purpose of the change of corporations and contracts, cooperated in by the railroad company, was to create a diversity of citizenship. In a suit brought by the plaintiff in the federal court in Kentucky, on the basis of diverse citizenship, to restrain another transfer corporation, created in Kentucky, from soliciting business and parking vehicles on the railroad premises in violation of plaintiff's exclusive contract, and to restrain the railroad company from permitting such violations, Held:

1. That the suit was not subject to dismissal under Jud.Code § 37, since the controversy was real and substantial, the plaintiff was the real party in interest, and the requisite diversity of citizenship existed. The cooperation between the plaintiff and the railroad company to have the rights of the parties determined by a federal court was not improper or collusive within the meaning of § 37. P. 276 U. S. 524.

2. The contract did not exceed the railroad company's powers under its Kentucky charter. P. 276 U. S. 525.

3. The contract is consistent with the provision of the Kentucky Constitution, § 214, forbidding any railroad company to make any exclusive or preferential arrangement for the conduct of any business as a common carrier. P. 276 U. S. 526.

4. In the absence of any governing provision of local statutes or constitution, the question whether such a contract is against public policy is one of general law. P. 276 U. S. 526.

5. Under the common law, as construed and applied by this Court, by state courts generally, and by English courts, such contracts are valid. Delaware etc. R. Co. v. Morristown, 276 U. S. 182. P. 276 U. S. 527.

6. Where the validity of a contract (in this case made in a state which has adopted the common law), involves no question of clubjuris

Page 276 U. S. 520

land title, or of local statute or constitution, or of fixed local usage, but depends upon a question of general law, federal courts, while inclining to follow courts of the state in which the controversy arises, are not bound by Rev.Stats. § 21 to do so, but are free to exercise their own, independent judgment. P. 276 U. S. 529.

15 F.2d 509 affirmed.

Certiorari, 273 U.S. 690, to a decree of the circuit court of appeals which affirmed a decree of permanent injunction against the above-named petitioner and the Louisville & Nashville Railroad Company restraining violation of a contract between the railroad company and the respondent. The railroad company did not appeal. clubjuris

Page 276 U. S. 522