In the case of Fidelity and Deposit Company v. Courtney, the U.S Supreme Court ruled on a dispute involving an insurance company's liability for losses incurred by a bank due to fraudulent activities committed by its employees. The Fidelity and Deposit Company had issued a bond insuring the Commercial National Bank against any loss caused by dishonest acts from its employees. However, when two bank officers engaged in fraudulent activity that led to significant financial loss for the bank, Fidelity refused to cover these losses arguing that it was not liable as per terms of their agreement which required immediate notification upon discovery of fraud or dishonesty. The court held in favor of the Commercial National Bank stating that while there was indeed delay in notifying about misconducts after they were discovered, this did not absolve Fidelity from covering losses resulting from those actions since such requirement wasn't explicitly stated within their contract. Therefore, despite some negligence on part of the insured party (the bank), insurer (Fidelity) could not escape responsibility unless it demonstrated actual prejudice suffered due to delayed notice.

The dissenting opinion in the case of Fidelity and Deposit Company v. Courtney argued that the majority's decision was inconsistent with previous rulings on similar matters, particularly regarding suretyship law. The dissenting justices believed that a surety should not be held liable for an obligation if there were any changes to the original contract without their consent or knowledge. They contended that even minor alterations could potentially increase a surety’s risk, which they had not agreed to bear initially. Therefore, according to them, such modifications would discharge a surety from liability unless explicitly stated otherwise in the terms of their agreement. This view contradicted the majority's ruling which upheld Fidelity and Deposit Company's liability despite changes made to contracts it guaranteed as a corporate surety.