In the case of Graham and The Title Guaranty and Surety Company v. United States of America, 1913, the Supreme Court examined whether a surety company was liable for interest on a debt owed to the government by its principal debtor. The court ruled in favor of the U.S., stating that when a surety guarantees payment on behalf of another party (the principal), it assumes all obligations including any accrued interest if default occurs. This decision stemmed from an incident where Graham, as collector of customs at Tampa Bay, Florida failed to deposit certain collections with Treasurer as required by law leading to his removal from office. His bondsmen were held responsible not only for this amount but also for additional interests which had accumulated since due date until repayment was made.

In the dissenting opinion for Graham and The Title Guaranty and Surety Company v. United States of America, Justice Holmes disagreed with the majority's decision to hold a surety company liable for its principal's debt under an interpretation of federal law. He argued that it was not clear from the language of the statute whether Congress intended to impose such liability on sureties, especially given that this would represent a significant departure from common law principles. Furthermore, he contended that if Congress had indeed intended such a change in policy, it should have made this intention explicit in legislation rather than leaving it up to judicial interpretation. Therefore, he concluded that without clearer evidence of congressional intent, courts should refrain from imposing obligations on parties beyond those explicitly stated in their contracts or required by established legal principles.