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Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co.

United States Supreme Court
276 U.S. 518 (1928)

Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co.


In 1925, Brown & Yellow Taxicab & Transfer Co. (Brown) (plaintiff), negotiated a contract with Louisville & Nashville Railroad Company (the Railroad) (defendant), for an exclusive license to enter into the Railroad’s property and solicit transfers. Brown alleged that the Railroad began to allow Brown’s competitors to enter on the property in violation of the exclusive agreement. Black & White Taxicab & Transfer Co. (Black)(defendant) was one of those competitors. At that time, all parties were Kentucky corporations. Next, Brown’s shareholders created a corporation under Tennessee law and transferred the business, contracts, and assets to the new corporation for the purpose of creating diversity of citizenship. Brown then sued the defendants in the United States District Court for the Western District of Kentucky. Black alleged that Brown incorporated in Tennessee in order to fraudulently create diversity jurisdiction, and that Brown’s contract with the Railroad was void as against the public policy of the state of Kentucky. The district court concluded that there was no fraud. The court also held the contract between Brown and the Railroad valid, and determined that Black had interfered with Brown’s contractual rights. The court issued an injunction barring Black from further interference. Black appealed to the United States Court of Appeals for the Sixth Circuit. The ruling was upheld, and Black petitioned the United States Supreme Court for certiorari, which was granted.

Rule of Law


Holding and Reasoning (Butler, J.)

Dissent (Holmes, J.)

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