In the 1916 case between Second National Bank of Cincinnati, Ohio and First National Bank of Okeana, Ohio, the U.S. Supreme Court was tasked with resolving a dispute over liability for cashing fraudulent checks. The issue arose when an individual named Charles Schmidlapp presented two checks to the First National Bank of Okeana that were drawn on his account at Second National Bank in Cincinnati but had been fraudulently altered to increase their value. Unaware of this alteration, First National accepted and paid out these checks before sending them back to Second National for reimbursement. When it discovered the fraud upon receipt, however, Second National refused payment. The court ruled in favor of the defendant (Second national bank), stating that as per banking law norms during those times; responsibility lies with whoever first pays out on a fraudulent check without detecting its illegitimacy - which in this case was First national bank who failed to detect alterations made by Schmidlapp while accepting his cheques initially.

In the dissenting opinion for the case between Second National Bank of Cincinnati, Ohio and First National Bank of Okeana, Ohio in 1916, it was argued that a national bank should not be allowed to sue another national bank in federal court based solely on their status as federally chartered institutions. The dissenting justices contended that allowing such lawsuits would effectively grant national banks greater legal rights than other corporations or individuals who must demonstrate diversity of citizenship or a federal question to bring a suit in federal court. They believed this interpretation contradicted the intent of Congress when it established rules for jurisdictional grounds within U.S. courts and could potentially flood federal courts with cases better handled at state level. Furthermore, they expressed concern over potential abuse by large banking institutions using this privilege to harass smaller banks through litigation.