In the case of National Bank of Newport, New York v. National Herkimer County Bank of Little Falls in 1911, the Supreme Court was tasked with determining whether a national bank could be held liable for accepting deposits from another bank that it knew or should have known were fraudulently obtained. The court ruled that a national bank can indeed be held responsible under such circumstances if it is proven to have acted in bad faith by knowingly participating in fraudulent activities. In this particular case, however, the court found insufficient evidence to prove that the defendant had knowledge about any fraudulent actions taken by its depositor and therefore reversed an earlier judgment against them.

The dissenting opinion in the case of National Bank of Newport, New York v. National Herkimer County Bank of Little Falls argued that the majority's decision to hold the defendant bank liable for accepting and crediting a check drawn on insufficient funds was incorrect. The dissent contended that it is not within a bank's duty to verify whether or not there are sufficient funds before accepting a check for deposit and giving credit based on it. They believed this responsibility should fall upon the drawer who issued the check without having enough money in their account, rather than placing an undue burden on banks to investigate every transaction thoroughly. Furthermore, they pointed out that such practices could potentially disrupt banking operations due to increased time consumption and costs associated with verifying each deposited item’s validity.