The case of American National Bank of Nashville, Tennessee v. Miller, Agent of the First National Bank of Macon, Georgia in 1912 revolved around a dispute over payment for cotton shipments. The American National Bank had advanced money to a cotton broker who then shipped the cotton to England but failed to repay his debt when he received payment from overseas buyers. Instead, he deposited the funds with the First National Bank which refused to release them without an order from their depositor or legal process compelling them. The Supreme Court ruled that while it was true that banks generally have no right under common law principles to apply deposits made by one person against debts owed by another person unless there is some agreement or understanding between them allowing this practice; however, if they are aware at time deposit is made that it belongs not really and beneficially to depositor but someone else whose agent he is making deposit for purpose paying specific debt due him (as here), bank may be held liable as constructive trustee for rightful owner's benefit if fails so apply it.

In the dissenting opinion of the case American National Bank of Nashville, Tennessee v. Miller, Agent of The First National Bank of Macon, Georgia (1912), Justice Holmes disagreed with the majority's interpretation that a bank could not be held responsible for accepting deposits from an insolvent depositor. He argued that when a bank accepts deposits from someone it knows or should know is insolvent and uses those funds to pay off its own debts owed to that person rather than distributing them among all creditors as required by bankruptcy law, it has received a preference and can be sued by other creditors for return of their share. In his view, this was true even if the bank did not have actual knowledge but merely had reason to believe insolvency was likely based on available information at the time.