In the case of Alice State Bank et al. v. Houston Pasture Company, the U.S Supreme Court in 1917 was tasked with determining whether a Texas state law that allowed banks to charge higher interest rates on loans than those set by federal laws was constitutional or not. The plaintiff, Alice State Bank, had charged an interest rate above what was federally permissible and argued that it could do so under Texas state law. However, the defendant, Houston Pasture Company claimed this violated their rights under federal usury laws which limit how much interest can be charged on a loan. The court ruled in favor of Alice State Bank stating that while national banks are subject to federal regulations regarding maximum allowable interest rates for loans they issue; state-chartered banks like Alice State Bank were governed by their respective states' banking laws unless these conflicted directly with specific provisions within Federal statutes.

The dissenting opinion in the case of Alice State Bank et al. v. Houston Pasture Company argued that the majority's decision was inconsistent with previous rulings and principles of equity. The dissent contended that a bank should not be held liable for damages when it acted in good faith, without knowledge or reason to know about any irregularities concerning checks deposited into an account by one of its customers. It emphasized that banks are not investigators but intermediaries between parties involved in financial transactions, and they cannot reasonably be expected to scrutinize every transaction for potential fraud or wrongdoing on part of their clients. Therefore, holding them responsible under such circumstances would place an undue burden on banking institutions and could potentially disrupt normal business operations.