In the case of Schuyler National Bank v. Gadsden, 1903, the U.S Supreme Court was tasked with determining whether a national bank could sue in federal court based on its status as a federally chartered institution or if it needed to meet additional diversity jurisdiction requirements. The controversy arose when Schuyler National Bank sued Gadsden in South Carolina state court over an unpaid debt and then attempted to move the case to federal court. However, both parties were citizens of South Carolina which would typically preclude them from moving their dispute into federal courts under diversity jurisdiction rules that require opposing parties be from different states. The Supreme Court ruled against Schuyler National Bank stating that being a nationally chartered bank did not automatically grant access to federal courts for all disputes; they still had to satisfy other conditions such as those related to diversity jurisdiction. This decision clarified that national banks are treated similarly as corporations for purposes of determining citizenship - they are considered citizens of the state where they are located (i.e., have their principal place of business) and thus must meet standard diversity requirements when seeking access to federal courts.

In the dissenting opinion for Schuyler National Bank v. Gadsden, it was argued that the majority's decision to uphold a lower court ruling in favor of Gadsden contradicted established legal principles regarding negotiable instruments and their transfer. The dissenting justices contended that when an individual endorses a check without specifying to whom it should be paid, they effectively make it payable to anyone who possesses it. Therefore, Schuyler National Bank had acted within its rights by cashing the check presented by one of its customers. They also disagreed with the majority's view that banks have an obligation to know or inquire about any potential disputes over ownership before accepting checks for deposit or payment; such a requirement would place an unreasonable burden on financial institutions and disrupt normal business operations.