In Farmers' and Mechanics' National Bank v. Dearing, the Supreme Court of the United States was asked to decide whether a bank could recover a debt from a third party who had received money from the debtor. The case involved a debt owed to the Farmers' and Mechanics' National Bank by one William Dearing. Dearing had transferred money to a third party, who had then used the money to purchase property. The bank sought to recover the debt from the third party, arguing that the transfer of money was a fraudulent conveyance. The Supreme Court held that the bank could not recover the debt from the third party. The Court reasoned that the transfer of money was not a fraudulent conveyance, as the third party had no knowledge of the debt and had acted in good faith. The Court further held that the bank had not taken sufficient steps to protect its interests, such as obtaining a lien on the property or obtaining a judgment against Dearing. As such, the Court held that the bank could not recover the debt from the third party.

In Farmers' and Mechanics' National Bank v. Dearing, the Supreme Court was tasked with determining whether a bank could recover from an individual who had fraudulently obtained money from it. The majority opinion held that the bank could not recover because of its own negligence in failing to properly investigate the circumstances surrounding the transaction. Justice Field dissented, arguing that although banks should exercise caution when making loans, they should be able to rely on their customers’ representations as long as those representations are made in good faith and without any knowledge of fraud or misrepresentation by either party. He further argued that if banks were unable to protect themselves against fraudulent transactions due to their own negligence then this would lead them into bankruptcy and ultimately harm society at large since banking is essential for economic growth.