The case Globe Indemnity Co. v. United States to the Use of Steacy-Schmidt Manufacturing Co., Inc., 1933, involved a dispute over payment for construction work done on a federal building. The Steacy-Schmidt Manufacturing Company had been subcontracted by the main contractor, who subsequently went bankrupt before paying them in full for their work. As per the Heard Act (1894), which required contractors on federal projects to post surety bonds guaranteeing completion of their contracts and payment of all laborers and suppliers, Globe Indemnity Company was held as surety. When sued by Steacy-Schmidt for recovery under this bond, Globe argued that they were not liable because they had already paid out an amount equal to penal sum of the bond due to other claims arising from same contract's non-performance. However, Supreme Court ruled against Globe stating that liability under Heard Act is several and not joint; each claimant may recover his own loss up until total amount equals penalty named in bond but no single claimant can recover more than value of his claim even if total payout does not reach limit set by bond's penalty clause.

In the dissenting opinion for Globe Indemnity Co. v. United States to the Use of Steacy-Schmidt Manufacturing Co., Inc., Justice Cardozo disagreed with the majority's interpretation of a surety bond contract and its application in this case. He argued that when interpreting contracts, courts should consider not only their literal wording but also their purpose and context within broader legal principles. In his view, the bond was intended as security for performance rather than payment; thus, it did not cover claims arising from non-payment by subcontractors or suppliers like Steacy-Schmidt Manufacturing Co., Inc.. Furthermore, he contended that allowing such claims would unfairly expand liability beyond what parties had agreed upon in their contract and could discourage companies from providing bonds due to increased risk exposure.