In the case of San Francisco National Bank v. Dodge in 1904, the U.S Supreme Court ruled on a dispute involving a bank's right to offset debts owed by an insolvent debtor with funds held in his account at that same bank. The defendant, Mr. Dodge, was appointed as receiver for an insolvent company and sued San Francisco National Bank to recover money deposited by the insolvent company prior to its bankruptcy declaration. The bank claimed it had used these deposits to offset debts owed by the bankrupt firm before its insolvency was declared officially. The court sided with Mr. Dodge stating that while banks have general rights of setoff against accounts when debtors default on their loans, this right does not extend into situations where insolvency proceedings are underway or imminent - unless there is explicit contractual agreement allowing for such action between both parties involved (bank and debtor). This decision established important precedent regarding banking law and creditors' rights during bankruptcy proceedings.

In the dissenting opinion for San Francisco National Bank v. Dodge, it was argued that the majority's decision to uphold a lower court ruling in favor of Dodge contradicted established principles of equity and fairness. The dissenting justices contended that the bank had acted within its rights under California law when it applied funds from Dodge's account to repay his debt without prior notice or consent. They maintained that this action did not constitute an illegal seizure or conversion of property as claimed by Dodge, but rather a lawful exercise of the bank’s right to offset debts owed by its customers with their deposits held at the institution. Furthermore, they disagreed with the majority's interpretation of relevant statutes and case law, arguing instead for a more literal reading which would have favored upholding traditional banking practices over protecting individual depositors' interests.