In the case of Underwood v. Metropolitan National Bank in 1891, the U.S Supreme Court was tasked with determining whether a bank could be held liable for accepting and paying out on checks that had been fraudulently altered by a third party. The plaintiff, Underwood, argued that the bank should have noticed the alterations and refused to honor them. However, after examining all evidence presented before it including precedents from previous similar cases, the court ruled in favor of Metropolitan National Bank stating that banks are not expected to detect every instance of forgery or alteration especially when such changes are skillfully done as was in this case. Therefore, they cannot be held responsible unless there is clear negligence on their part which wasn't evident here according to justices' interpretation.

In the dissenting opinion for Underwood v. Metropolitan National Bank, it was argued that the bank should not be held liable for accepting and cashing checks from a fraudulent account holder who had deceived both parties. The dissent emphasized that banks are not in a position to investigate every customer's honesty or verify their business practices before providing services. They believed that holding the bank responsible would set an unfair precedent, as it is unreasonable to expect such institutions to act as detectives or assume liability when they have been equally victimized by fraudsters' actions. Furthermore, they contended this could potentially discourage banks from offering necessary financial services due to fear of legal repercussions stemming from customers' dishonesty which is beyond their control.