In the 1906 case of Yates v. Utica Bank, the United States Supreme Court ruled on a matter involving bank liability and fraudulent checks. The plaintiff, Mr. Yates, had deposited two forged checks into his account at Utica Bank which were subsequently cleared by another bank before being discovered as forgeries. When they were found to be fraudulent, Utica Bank charged back the amount of these checks against Mr.Yates' account without his knowledge or consent. The court held that once a bank has paid out on a check in good faith and it is later discovered to be fraudulent, it cannot charge back against its customer's account without their agreement because doing so would violate their contractual relationship with the customer.

In the dissenting opinion for Yates v. Utica Bank, the justice argued that there was no legal basis to hold the bank liable for damages caused by a fire on property it had foreclosed upon and sold at auction. The justice contended that once foreclosure proceedings were initiated, all rights of possession and control over the property transferred from Yates to Utica Bank. Therefore, any damage occurring after this point should not be attributed to or borne by the bank as they did not have direct control over what happened on said property post-foreclosure sale. Furthermore, he asserted that holding banks accountable in such situations would set a dangerous precedent which could potentially discourage lenders from providing mortgages altogether due to increased risk exposure.