In Merchants' Bank of Pittsburgh v. Slagle, the Supreme Court of the United States was asked to decide whether a bank could recover a debt from a third party who had received money from the debtor. The debtor had given the third party a check for the amount of the debt, but the check was not honored by the bank. The third party argued that they had no knowledge of the debt and should not be held liable for it. The Supreme Court held that the third party was liable for the debt. The Court reasoned that the third party had received the money from the debtor with knowledge of the debt, and that the third party had a duty to inquire into the circumstances of the transaction. The Court also held that the bank was entitled to recover the debt from the third party, even though the check was not honored. The Court's decision established that a third party who receives money from a debtor with knowledge of the debt is liable for the debt, even if the check is not honored by the bank. This decision has been cited in numerous cases since then, and is still good law today.

In Merchants' Bank of Pittsburgh v. Slagle, the Supreme Court was tasked with determining whether a state court had jurisdiction to hear a case involving an out-of-state bank and its customers. The majority opinion held that the state court did not have jurisdiction in this matter because it involved citizens from different states and thus fell under federal law. Justice Field dissented, arguing that while Congress has authority over interstate commerce, it does not extend so far as to prevent individual states from exercising their own laws regarding contracts between two parties within their borders. He argued that if Congress intended for such matters to be governed by federal law exclusively, they would have explicitly stated so in legislation or through judicial precedent rather than leaving it up to interpretation by the courts. Furthermore, he noted that allowing each state's laws on contract disputes between residents of different states could lead to conflicting rulings which could cause confusion among litigants and impede economic progress due to uncertainty about what is legally binding across jurisdictions.