In the case of First National Bank of Washington v. Whitman, the Supreme Court of the United States was asked to decide whether a bank could be held liable for a debt incurred by a third party. The case arose when the First National Bank of Washington (the Bank) was sued by Whitman for failing to pay a debt that had been incurred by a third party. The Bank argued that it was not liable for the debt because it had not been a party to the original contract. The Supreme Court held that the Bank was liable for the debt. The Court reasoned that the Bank had acted as a guarantor of the debt, and that it had assumed the responsibility of paying the debt when it accepted the third party's note. The Court also noted that the Bank had not taken any steps to protect itself from liability, such as requiring the third party to provide security for the debt. The Court's decision established that banks can be held liable for debts incurred by third parties, even if the bank was not a party to the original contract. This decision has been cited in numerous cases since, and has become an important precedent in contract law.

In First National Bank of Washington v. Whitman, the Supreme Court was tasked with determining whether a bank could be held liable for failing to pay out on an unendorsed check that had been stolen from its customer. The majority opinion found in favor of the bank, holding that it did not have any legal obligation to honor the check since it had not been endorsed by its rightful owner and thus lacked authority over it. Justice Field dissented from this decision, arguing that banks should bear responsibility when they fail to exercise reasonable care in protecting their customers’ property and allowing unauthorized persons access to such funds. He argued further that if banks were allowed off the hook for such negligence then they would be incentivized to act recklessly with little regard for their customers’ interests or safety. As a result, he concluded that banks should indeed be held accountable when they are careless in handling checks belonging to their clients and do not take appropriate measures against theft or fraud involving those accounts