In the 1900 case of Sully v. American National Bank, the U.S. Supreme Court was tasked with determining whether a bank could be held liable for accepting and processing forged checks. The plaintiff, Mr. Sully, had entrusted his secretary with blank checks which were later fraudulently filled out by the secretary and cashed at American National Bank where both parties held accounts. Upon discovering this deception, Mr. Sully sued the bank to recover his losses arguing that it should have detected the forgery before processing these transactions. The court ruled in favor of American National Bank stating that while banks do have an obligation to their customers to act diligently and responsibly in handling their funds; they are not expected or required to detect every instance of fraud especially when there is no reason for suspicion as was in this case since all previous dealings between Mr.Sully's secretary and them had been legitimate. This decision set a precedent emphasizing on shared responsibility between clients and financial institutions regarding fraudulent activities involving negotiable instruments like checks; thus shaping future banking practices related thereto.

The dissenting opinion in the case of Sully v. American National Bank argued that the majority's decision was not consistent with established legal principles regarding contracts and obligations. The dissenting justices believed that Mr. Sully had a valid contract with his creditors, which should have been honored despite his subsequent bankruptcy proceedings. They contended that it was unjust to allow Mr. Sully to escape from his contractual obligations simply because he declared bankruptcy after making these agreements, especially since there were no allegations of fraud or misconduct on his part when entering into them initially. Furthermore, they disagreed with the majority's interpretation of relevant statutes and felt their ruling could potentially undermine confidence in commercial transactions by creating uncertainty about whether contractual commitments would be upheld.