Dermott v. Wallach was a case heard by the United States Supreme Court in 1861. The dispute arose when Dermott, an Irish immigrant living in New York City, purchased a bond from Wallach for $1,000 and then sued him to recover the money after learning that it had been fraudulently obtained from another party. The court held that Dermott could not recover his money because he had bought the bond without taking reasonable steps to ascertain its validity or legality before making payment. Furthermore, since he was aware of some facts which should have put him on notice as to its invalidity at the time of purchase, he could not now claim ignorance as a defense against liability for his own negligence in failing to investigate further prior to buying it. This decision established precedent regarding contracts made with knowledge of their illegality and set forth standards for determining whether parties are entitled to relief if they fail due diligence when entering into such agreements

In Dermott v. Wallach, the Supreme Court was asked to decide whether a contract between two parties that had been made in New York and then moved to California could be enforced under California law. The majority opinion held that it could not because of the Full Faith and Credit Clause of the Constitution, which requires states to give full faith and credit to contracts formed in other states. However, Justice Grier dissented from this decision on the grounds that there was no evidence presented at trial showing that either party intended for their agreement to remain valid after they moved out of state. He argued further that even if such an intention were present, it would still be up to each individual state's laws as opposed whether or not a contract is enforceable within its borders; thus making any attempt by Congress or another court body invalidating such agreements unconstitutional. In conclusion, Justice Grier concluded his dissent by stating "The power claimed [by Congress] is too great for us safely concede."