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Civil Procedure Keyed to Glannon
Black & White Taxicab Transfer Co. v. Brown & Yellow Taxicab & Transfer Co.
Facts
Brown & Yellow Taxicab & Transfer Co. (Plaintiff) sued Black & White Taxicab & Transfer Co. (Defendant) and Louisville & Nashville Railroad Co. (Railroad) in the United States District Court for the Western District of Kentucky to prevent Defendant from interfering with Plaintiff’s contract with Railroad. Under the contract between Plaintiff and Railroad, Plaintiff had an exclusive license to enter into Railroad’s property for soliciting transfers. However, according to Plaintiff, Railroad was letting Plaintiff’s competitors, including Defendant, enter onto Railroad’s property in violation of their exclusive contract. Although all the parties were incorporated in Kentucky, jurisdiction of the district court was invoked on the basis of diversity of citizenship because Plaintiff’s shareholders arranged to transfer the corporation to Tennessee in order to create diversity. Once Plaintiff was incorporated in Tennessee, Plaintiff brought suit in federal court. Defendant argued that Plaintiff incorporating in Tennessee to create diversity is fraudulent, and that the contract made between the parties was void because it went against the public policy of Kentucky. After the district court determined that fraud did not exist, and that the contract between Plaintiff and Railroad was interfered by Defendant, the court barred Defendant from further interfering with Plaintiff’s contract with Railroad. As a result, Defendant appealed to the United States Court of Appeals for the Six Circuit, which affirmed the district court’s ruling. The United States Supreme Court granted certiorari.
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