In the 1901 Supreme Court case Talbot v. Sioux City First National Bank, the court had to decide whether a bank could be held liable for accepting and cashifying checks that were fraudulently endorsed. The plaintiff, Talbot, was a cattle dealer who issued several checks to another party as payment for cattle purchases. However, this other party never received these payments because their employee stole and fraudulently endorsed them before depositing into his personal account at Sioux City First National Bank. When the theft was discovered, Talbot sued the bank on grounds of negligence in failing to verify endorsements before accepting deposits. The Supreme Court ruled in favor of Sioux City First National Bank stating that banks are not required by law to investigate every endorsement on deposited items unless there is reason or suspicion of foul play; it's impractical due its high volume nature of transactions daily. Furthermore, they stated that since no direct relationship existed between Talbot (non-customer) and the bank - liability couldn't be established under existing laws during those times.

In the dissenting opinion for Talbot v. Sioux City First National Bank, Justice Harlan disagreed with the majority's interpretation of Iowa state law regarding mortgage foreclosure sales. He argued that under Iowa law, a mortgagor has an absolute right to redeem their property within one year after sale and this right cannot be waived or taken away by any agreement made at the time of or subsequent to such sale. Therefore, he believed that Mrs. Talbot had not lost her rights in relation to her property despite signing a contract stating otherwise during foreclosure proceedings initiated by Sioux City First National Bank. In his view, she was still entitled to reclaim ownership if she paid off her debt within one year from the date of sale as per state laws governing redemption periods following foreclosures.