In the case of McCarthy v. First National Bank of Rapid City, South Dakota in 1911, the U.S Supreme Court was tasked with determining whether a bank could be held liable for damages after it refused to honor checks presented by a depositor who had sufficient funds in his account. The plaintiff, Mr. McCarthy, had deposited money into his account at the defendant's bank and subsequently issued several checks against this deposit. However, due to an error on part of the bank's employees who failed to properly credit his account for these deposits, they dishonored some of these checks believing that there were insufficient funds available. The court ruled in favor of Mr.McCarthy stating that banks have an obligation towards their customers to exercise ordinary care and diligence when handling their accounts and transactions; failure to do so would make them liable for any resulting damages or losses suffered by their customers as a result thereof.

The dissenting opinion in the case of McCarthy v. First National Bank of Rapid City, South Dakota argued that the majority's decision was based on a misinterpretation of law and facts. The dissenting justices believed that there was no legal basis for denying McCarthy his right to redeem his property after it had been sold under foreclosure by the bank. They contended that he should have been allowed to reclaim his property upon payment of all outstanding debts, including interest and costs associated with its sale. Furthermore, they disagreed with the majority's view that McCarthy had waived this right through an agreement made at the time of loan origination; instead, they saw this as an unfair imposition by a powerful financial institution over a less sophisticated borrower who may not have fully understood what he was giving up. In their view, such agreements were contrary to public policy and should be deemed unenforceable.