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Mottley and his wife (P) were injured while riding on the Louisville & Nashville R.CO. (D) in 1871. A settlement was reached with the following conditions: P would release their claims for damages against D for a contract that granted them free transportation during the remainder of their lives. D refused to renew P's pass in 1907 because an act of Congress forbade the giving of free passes or free transportation. P filed an action in a Circuit Court of the United States for the Western District of Kentucky. Both P and D were citizens of Kentucky. P claimed that D would raise a constitutional defense in his answer and thereby create federal jurisdiction. D filed a demurrer to the complaint for failing to state a cause of action. The demurrer was denied. P got the judgment. D appealed directly to the Supreme Court. On its own motion (sua sponte), the Supreme Court raised the issue of whether the federal courts had jurisdiction to hear the case.

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