In the 1891 case of Franklin County v. German Savings Bank, the U.S. Supreme Court ruled on a dispute involving county bonds issued by Franklin County in Kansas to aid in railroad construction under an act of state legislature. The bank purchased these bonds and later sued when the county refused to pay them off, arguing that they were not legally authorized because they exceeded statutory debt limits set by Kansas law at the time of issuance. However, it was found that this limit had been repealed before these particular bonds were issued. The court held that while there may have been irregularities or even fraud involved in issuing some of these bonds, as long as they appeared regular on their face and were issued under apparent legal authority with no obvious defects or alterations present for purchasers to see, then innocent third-party holders could enforce them against the county regardless if those who originally sold them acted improperly or illegally. This decision reinforced principles regarding negotiable instruments (like municipal bonds) which are designed to be freely transferable without risk from hidden claims or defenses related back to their original issue.

In the dissenting opinion for Franklin County v. German Savings Bank, Justice Bradley argued that the majority's decision was inconsistent with previous rulings of the court and violated principles of equity. He contended that a county should not be held liable for bonds issued under false pretenses by unauthorized individuals claiming to act on its behalf, especially when there is no evidence that it received any benefit from these transactions. Furthermore, he asserted that innocent third parties who purchase such fraudulent securities in good faith have legal recourse against those who sold them rather than against an unknowing and uninvolved public entity like a county government. Thus, he disagreed with the majority's ruling holding Franklin County responsible for repaying bonds fraudulently issued in its name.