The Chesapeake and Ohio Canal Company brought a case against the Union Bank of Georgetown, claiming that the bank had failed to pay for certain bonds it had purchased from them. The canal company argued that they were entitled to payment in full, but the bank claimed that some of these bonds were fraudulent and therefore not payable. The Supreme Court ultimately sided with the canal company, ruling that all of their bonds must be paid in full regardless of any fraud or misrepresentation on behalf of either party. This decision established an important precedent regarding contract law; namely, if one party enters into a contract without knowledge or suspicion as to its validity then they are still obligated to fulfill their contractual obligations even if those obligations turn out later to be invalid due to fraud or misrepresentation by another party.

In the dissenting opinion of The Chesapeake and Ohio Canal Company, Plaintiff in Error v. The Union Bank of Georgetown, Justice Story argued that the Court should not have reversed a judgment from the Circuit Court which had found for the plaintiff. He believed that there was sufficient evidence to support this decision as it was based on an agreement between two parties who were both competent to enter into such an arrangement. Furthermore, he noted that even if one party had acted negligently or fraudulently in entering into this contract, they could still be held liable under existing law. In conclusion, Justice Story felt strongly that reversing a lower court's ruling without any new evidence being presented was unjustified and would set a dangerous precedent for future cases involving contracts between private individuals or entities.