In the case of Barnette v. Wells Fargo Nevada National Bank et al., 1925, the United States Supreme Court was tasked with determining whether a bank could be held liable for damages when it paid out on a check that had been fraudulently altered. The plaintiff, Barnette, had written a check for $20 which was then fraudulently altered to $120 and cashed by an unknown party at Wells Fargo Bank. When the bank charged Barnette's account for the full amount of $120, he sued them to recover his loss. The court ruled in favor of Wells Fargo stating that under Section 3407 of California’s Civil Code (which is similar to Negotiable Instruments Law), if someone negligently leaves space on their checks such that they can be easily altered without detection, they must bear any resulting losses themselves rather than passing them onto innocent third parties like banks who pay out in good faith. Therefore, since Mr. Barnette left enough blank space on his check making it easy for fraudulent alteration and did not notify the bank about this potential risk beforehand; he should bear all consequences himself.

The dissenting opinion in the Barnette v. Wells Fargo Nevada National Bank case argued that the majority's decision was incorrect because it failed to properly interpret and apply the law regarding negotiable instruments. The dissent believed that, under this law, a bank is not liable for paying on a forged check unless it fails to exercise ordinary care or diligence in doing so. In this case, there was no evidence presented suggesting that Wells Fargo acted without such care or diligence when it paid on the checks at issue. Therefore, according to the dissenting justices' interpretation of applicable laws and facts of this particular case, they concluded that Wells Fargo should not be held responsible for any loss resulting from its payment on those checks.