In the 1893 case Garner v. Second National Bank of Providence, the U.S. Supreme Court was asked to determine whether a bank could be held liable for cashing checks that were fraudulently endorsed by an individual who was not authorized to do so. The plaintiff, Garner, had issued several checks payable to another party but they were intercepted and falsely endorsed by a third party before being presented at the defendant bank for payment. The court ruled in favor of the defendant bank stating that it is not within its duty or responsibility to ensure that endorsements on checks are genuine unless there's suspicion of fraud or irregularity which should put them on inquiry; otherwise banks would face undue burden and risk in conducting their business operations efficiently. Therefore, if no such notice exists then banks may assume endorsements are legitimate without liability.

In the dissenting opinion for Garner v. Second National Bank of Providence, it was argued that the majority's decision failed to properly consider and apply Rhode Island law. The dissent emphasized that under Rhode Island law, a bank is not liable for paying on forged checks unless there has been negligence or collusion by the bank itself. In this case, there was no evidence presented to suggest any such misconduct by the Second National Bank of Providence when it paid out on checks forged by one of its customers' employees. Therefore, according to this view, the bank should not be held financially responsible for these losses; rather they should fall upon Garner who had entrusted his employee with access to his funds in spite of knowing about her previous criminal record related to forgery.