The U.S. Supreme Court case Citizens National Bank of Roswell, New Mexico v. Davisson (1912) revolved around a dispute over the payment of promissory notes issued by the bank to J.H.P. Davisson and his wife, who later declared bankruptcy before paying off their debt. The bank sued for recovery but was met with resistance as Davisson claimed that he had already paid part of his debt through cattle sales which were not credited towards his account by the bank's cashier without proper authorization from him or any other officer at the bank. The court ruled in favor of Citizens National Bank stating that while it is true that cashiers do not have inherent authority to release debts owed to banks they serve, this does not apply when there are circumstances showing knowledge and acquiescence on part of directors or officers in such transactions made by cashiers; thus making them binding upon banks themselves. In essence, since evidence showed no objection from anyone at Citizens National Bank regarding how its cashier handled payments received from Mr.Davisson via cattle sales until after bankruptcy proceedings began against him; it was concluded that these actions were implicitly authorized thereby negating any claims about non-payment raised during litigation.

In the dissenting opinion for Citizens National Bank of Roswell, New Mexico v. Davisson, Justice Holmes disagreed with the majority's interpretation of the law and its application to this case. He argued that a bank should not be held liable for honoring checks drawn by an individual who had been declared insane but whose insanity was unknown to the bank at that time. According to him, it is unreasonable and unfair to expect banks to know or investigate every customer's mental health status before processing their transactions. Furthermore, he contended that if such a rule were adopted universally in banking practice, it would create unnecessary complications and inefficiencies in daily operations without significantly improving protections for vulnerable individuals like those suffering from mental illness.