Without its consent, the property of a railroad company may not be used by taxicab men or others to solicit or carry on their business, and it is beyond the power of the state in the public interest to require the railroad company without compensation to allow its property so to be used.
Respondent taxi company, under a contract with a railroad, had an exclusive right to park at the station while awaiting trains and to solicit passengers to use its services. Respondent filed suit against petitioner taxi company for interference with the contract after petitioner began to solicit business in similar ways at the station. Petitioner appealed after respondent obtained an injunction, and the U.S. Supreme Court granted certiorari.
Was the contract between the railroad and the taxi company valid?
The Court held the contract was valid because it was beyond the power of the State in the public interest to require the railroad company to allow its property to be used by taxi companies without compensation. The Court held detriment to the public interest would not be presumed without a showing of improper conduct and freedom of contract would be enforced by the courts. Petitioner sought to rely upon prior state court decisions, but the Court stated that while it was inclined to follow decisions of the state in which the controversy arose, it was free to exercise its independent judgment in the application of federal common law principles to questions of general law.