nothing to indicate that any such determinations are to be made. Congress intended that prohibition officers should not intentionally fail to report violations and that the law should be enforced against all offenders. The general clause covers all violations except the relatively few specifically dealt with. And it reasonably may be held to apply to violations of official duties and to safeguard against connivance between officers and offenders. He also argues that the imposition of heavier penalties for second and subsequent offenses shows that the clause was not intended to apply to offending officers because, as it was said, they would not be in office after conviction. But that suggestion has little if any weight when it is remembered that the clause is aimed at so many violations and non-office-holding offenders. There is no rule requiring every part of the provision to apply to all classes covered by it. Cf. United States v. Union Supply Company, 215 U. S. 50, 55. Moreover, it is not impossible that an enforcement officer may be in office subsequent to a conviction for such an offense.

The construction contended for by defendant unduly restrains the language of the clause in question, is inconsistent with the context and contrary to the purposes of the Act and the policy of Congress. It is without substan

tial support and cannot be sustained. Judgment affirmed.

MR. JUSTICE SUTHERLAND and MR. JUSTICE SANFORD dissent.

BLACK AND WHITE TAXICAB AND TRANSFER COMPANY v. BROWN AND YELLOW TAXICAB AND TRANSFER COMPANY.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SIXTH CIRCUIT.

No. 174. Argued January 13, 16, 1928.-Decided April 9, 1928. A Kentucky railroad corporation made a contract with the plaintiff, a Tennessee corporation carrying on a transfer business at a city

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, coöperated 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 coöperation 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. 524. 2. The contract did not exceed the railroad company's powers under its Kentucky charter. P. 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. 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. 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. R. Co. v. Morristown, 276 U. S. 182. P. 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

Argument for Petitioner.

276 U.S.

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., § 721, to do so but are free to exercise their own, independent judgment. P. 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.

Mr. N. P. Sims, with whom Messrs. John L. Stout and Guy H. Herdman were on the brief, for petitioner.

Dismissal of the action should have been ordered under § 37 of the Judicial Code. Lehigh Mining Co. v. Kelly, 160 U. S. 327; Miller & Lux v. Canal Co., 211 U. S. 293; Foster's Fed. Prac., Vol. 1, p. 134; Morris v. Gilman, 129 U. S. 315.

The law as decided by the Kentucky Court of Appeals should be followed as controlling on the validity of the contract. Hartford Fire Ins. Co. v. Chicago, etc., Ry. Co., 175 U. S. 91; Equitable Life Ins. Co. v. Brown, 213 U. S. 29; Palmer v. Ohio, 248 U. S. 32; Hairston v. Danville Ry. Co., 208 U. S. 598.

If respondent's right in the contract be considered property, then the decision of the state court establishing a rule in regard to it is to be followed by the federal courts. L. R. A., 1916A, 1011; 40 L. R. A. (N. S.), 380, 412 to 433; Guffey v. Smith, 237 U. S. 101; Hinde v. Vatter, 5 Pet. 398; Swift v. Tyson, 16 Pet. 1; Kuhn v. Fairmont Coal Co., 215 U. S. 349.

Donovan v. Pennsylvania Co., 199 U. S. 278, distinguished.

518

Argument for Respondent.

The contract is in excess of the railroad company's charter power. McConnell v. Pedigo, etc., 92 Ky. 465. The contract was contrary to § 214, Kentucky Constitution, and therefore unenforceable. L. & N. R. R. Co. v. Central Stockyards Co., 133 Ky. 148.

Mr. M. M. Logan for respondent.

Respondent, acting in good faith, was within its rights in obtaining its charter from Tennessee, although it may have done so for the purpose of conferring on the federal courts jurisdiction to determine controversies which might arise between it and the citizens of Kentucky. Lehigh Mining Co. v. Kelly, 160 U. S. 327, distinguished.

Federal courts are not compelled to follow the decisions of the local state courts on questions of general law. Salem Trust Co. v. Manufacturers' Finance Co., 264 U. S. 182.

Donovan v. Pennsylvania R. R. Co., 199 U. S. 278, decides all points raised in this suit against the contention of petitioner, except one question of fact, which has been decided against it both by the District Court and the Circuit Court of Appeals.

The Railroad Company has implied authority to do all acts necessary for the full and complete utilization of its special powers, which are not expressly or impliedly excluded by the terms of the grant. Aside from the transportation of freight and passengers, it may use its individual property as it pleases so as to make money for itself. Louisville Property Co. v. Commonwealth, 146 Ky. 847.

It is by reason of the implied authority which a railroad company has to use its private property as it pleases when the use does not relate to its transportation business that it may rent part of its depot and building for news stands,

Opinion of the Court.

276 U.S.

restaurants, barber shops, and other like conveniences. If it may do this, it may lease to a taxicab company its grounds so that the employees of such company may come thereon and solicit business. It has the authority to keep off of its premises any person not having any business with it who desires to use its property for his personal gain.

The Railroad Company has implied authority under its charter to enter into contracts such as the one in controversy, Louisville Property Co. v. Commonwealth, supra.

The contract is not violative of § 214, Kentucky Constitution.

The contract was not made by the Railroad Company for the conduct of its business as a common carrier.

MR. JUSTICE BUTLER delivered the opinion of the Court.

Respondent sued petitioner and the Louisville and Nashville Railroad Company in the United States court for the western district of Kentucky to prevent interference with the carrying out of a contract between the railroad company and the respondent. The district court entered a decree in favor of respondent. The railroad company declining to join, petitioner alone appealed. The Circuit Court of Appeals affirmed, 15 F. (2d) 509, and this Court granted a writ of certiorari. 273 U. S. 690.

Respondent is a Tennessee corporation carrying on a transfer business at Bowling Green, Kentucky. The petitioner is a Kentucky corporation in competition with respondent. The railroad company is a Kentucky corporation. In 1925, it made a contract with respondent whereby it granted the exclusive privilege of going upon its trains, into its depot, and on the surrounding premises to solicit transportation of baggage and passengers. And