In the case of National Bank of Commerce v. Downie, Trustee (1910), the U.S Supreme Court was tasked with determining whether a national bank could be held liable for accepting deposits from an insolvent corporation whose officers were aware of its insolvency but failed to inform the bank. The court ruled in favor of the National Bank of Commerce, stating that it had no duty to investigate the solvency status of every depositor and therefore should not be penalized for unknowingly accepting deposits from an insolvent corporation. This ruling established a precedent that banks are not responsible for verifying their customers' financial stability before conducting transactions with them.

In the dissenting opinion for the case of National Bank of Commerce v. Downie, Trustee, 1910, Justice Holmes argued that a bank should not be held liable for accepting deposits from an insolvent depositor if it was unaware of the depositor's insolvency. He contended that banks are in no position to know or investigate every customer's financial status and therefore cannot reasonably be expected to refuse deposits based on this information. Furthermore, he pointed out that such a rule would discourage banks from accepting deposits and thereby undermine their role as financial intermediaries. In his view, only when a bank has actual knowledge of insolvency should it bear responsibility for returning funds deposited by an insolvent party.