In the case of Fidelity and Deposit Company v. L. Bucki & Son Lumber Company in 1902, the U.S Supreme Court was tasked with resolving a dispute over payment for lumber supplied by Bucki to a contractor who had defaulted on their obligations. The Fidelity and Deposit Company had issued surety bonds guaranteeing the contractor's performance but refused to pay when called upon after default occurred. The court ruled that under Wisconsin law, which governed this contract, a bondholder is liable if they have been notified about an impending claim before it matures into judgment against them - even if no formal demand has been made yet or legal proceedings initiated at that time. Therefore, since Fidelity was aware of Bucki's claims prior to any judgement being rendered against its principal (the defaulting contractor), it was held responsible for paying those claims up to the amount covered by its bonds.

The dissenting opinion in the case of Fidelity and Deposit Company v. L. Bucki & Son Lumber Company argued that the majority's decision was inconsistent with previous rulings on similar issues, particularly those involving surety companies. The dissent contended that a surety company should not be held liable for losses incurred due to fraudulent actions by its principal if it had no knowledge or involvement in such activities. It further asserted that there was insufficient evidence to prove any collusion between the principal and the surety company, which would have been necessary to hold them jointly responsible for damages under existing legal principles. Therefore, according to this view, Fidelity and Deposit Company should not have been found liable for damages caused by their client's fraudulent conduct.