In the case of Gelfert v. National City Bank of New York, 1940, the U.S Supreme Court was tasked with deciding whether a bank could be held liable for paying out on checks that were fraudulently endorsed by an employee of the payee company. The plaintiff in this case was Mr. Gelfert who served as executor to his deceased brother's estate which owned a corporation named American Lithographic Company (ALC). An ALC employee had been endorsing and cashing corporate checks without authorization, causing financial loss to ALC. When these fraudulent activities were discovered after Mr.Gelfert’s brother’s death, he sued National City Bank where those checks were cashed claiming they should have known about or suspected foul play due to irregularities in endorsements. The court ruled against Gelfert stating that there is no legal obligation for banks to investigate every check presented for payment unless there are clear signs suggesting potential wrongdoing such as noticeable alterations or discrepancies on the face of it. In this instance, nothing appeared amiss with any of these transactions at first glance hence absolving National City Bank from liability.

In the dissenting opinion for Gelfert v. National City Bank of New York, Justice Black disagreed with the majority's decision to uphold a lower court ruling that allowed banks to charge fees for trust services without explicit authorization in wills or trusts. He argued that this practice was not universally accepted and could lead to excessive charges if left unchecked by courts. Furthermore, he contended that it was unfair for beneficiaries who had no say in selecting the trustee or negotiating its compensation. Justice Black also pointed out inconsistencies between state laws regarding trustees' rights to compensation, suggesting a need for clearer guidelines rather than leaving such decisions up to individual banks' discretion.