The Supreme Court case National Exchange Bank of Baltimore v. Peter in 1891 revolved around a dispute over the payment of bonds issued by the city of Alexandria, Virginia. The National Exchange Bank purchased these bonds from Peter and later discovered that they were part of an illegal issue, thus making them void. Consequently, the bank sued to recover its money. However, it was ruled that since both parties participated in good faith and there was no fraud involved on either side - with neither party aware at the time that the bond issue was illegal - recovery could not be granted under existing law principles which state "where both parties are equally innocent (or guilty) then loss lies where it falls". Therefore, even though technically speaking those bonds were invalid due to being illegally issued by Alexandria City officials who exceeded their authority; because this fact wasn't known during transaction process hence couldn't influence decision-making or cause harm intentionally; therefore court decided against allowing any compensation for losses incurred as result thereof.

In the dissenting opinion for National Exchange Bank of Baltimore v. Peter, Justice Lamar disagreed with the majority's interpretation of Maryland law and its application to this case. He argued that under Maryland law, a bank could not be held liable for accepting deposits from an executor who later misappropriated those funds because it had no duty to inquire about the source or use of such funds unless there was evidence suggesting wrongdoing. In his view, holding banks responsible in these situations would impose an unreasonable burden on them and disrupt normal banking operations. Furthermore, he contended that even if a bank did have such a responsibility under state law, federal bankruptcy laws should preempt it since they were designed to ensure equal distribution among creditors rather than allowing individual states to prioritize certain claims over others.