The U.S. Supreme Court case Illinois Surety Company v. United States to the Use of Peeler et al., Trading as Faith Granite Company, 1915 revolved around a dispute over payment for construction work done on a federal building in North Carolina by the Faith Granite Company under contract with J.D. Elliott, who was insured by the Illinois Surety Company. When Elliott failed to pay for labor and materials provided by Peeler (Faith Granite), they sued both him and his surety company under provisions of the Heard Act which allowed unpaid suppliers or workers to sue contractors' bondsmen directly if not paid within six months after completion of work. The main issue before court was whether this right extended beyond those who had direct contractual relationships with principal contractor i.e., subcontractors like Faith Granite Co.. The Supreme Court ruled that it did, affirming lower courts’ decisions that held Illinois Surety liable for payments owed by its client Elliot to third parties involved in project's execution.

In the dissenting opinion for Illinois Surety Company v. United States to the Use of Peeler et al., it was argued that a surety company should not be held liable for payments made by a contractor in violation of an agreement with laborers, unless there is clear evidence showing that such payments were made with the knowledge and consent of the surety company. The dissenting justices believed that holding a surety responsible under these circumstances would unfairly expand its obligations beyond what was agreed upon in its contract. They maintained that if any party suffered loss due to fraudulent or unauthorized actions by another party, they should seek redress through legal action against those directly responsible rather than attempting to shift their losses onto others who had no part in causing them.