In the 1941 case of Continental Casualty Co. et al. v. United States, the U.S Supreme Court ruled in favor of the government, upholding its right to collect taxes on insurance premiums paid by a foreign corporation for reinsurance with an American company. The dispute arose when Continental Casualty Company and others argued that these payments were not taxable under Section 204(a) of Revenue Act as they did not constitute "premiums received" by them during their taxable year but rather represented amounts held in trust for reinsurers until losses occurred or became ascertainable which might be years later. However, the court disagreed stating that such interpretation was inconsistent with general understanding and usage within insurance industry where 'premiums received' meant gross amount credited to insurer without deduction for future liabilities or contingencies.

In the dissenting opinion for Continental Casualty Co. et al. v. United States, Justice Frankfurter argued that the majority's decision to allow recovery under a performance bond for losses not directly caused by failure of contractual performance was an unwarranted extension of liability beyond what had been agreed upon in the contract itself. He contended that such bonds are intended to secure fulfillment of specific obligations and should not be interpreted as providing general insurance against all possible losses arising from any aspect related to the project at hand, unless explicitly stated in their terms. Furthermore, he expressed concern about potential negative implications this ruling could have on future contracts and bonding practices due to increased uncertainty around risk assessment and pricing.