This section contains the nature of the case and procedural background.

Brown (P) made a contract with Louisville and Nashville Railroad (D). It involved an exclusive license by P to enter D's property and solicit cab rides. P claimed that D allowed P's competitors to enter and solicit business as well. Black (D1) was one such competitor. Both P and D1 were both Kentucky corporations. P then created a Tennessee corporation and transferred its business, and contracts to the new corporation solely to create diversity of citizenship. P then sued Ds in Kentucky. D1 immediately claimed that P incorporated in Tennessee in order to create diversity of citizenship. D1 also claimed that the P-D contract was against public policy. The court ruled in favor for P in every aspect of the case: there was no fraud with respect to diversity, and the P-D contract was valid. The court issued an injunction against D1 from interfering in the P-D contract. D1 appealed, and the Sixth Circuit affirmed. The Supreme Court granted certiorari.

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