In the case of Jenkins, Receiver, et al. v. National Surety Company (1927), the 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 National Surety Company had issued a bond to cover any potential losses caused by dishonest acts from the bank’s employees. However, when such fraudulent actions led to significant financial loss for the bank and it sought compensation under this bond agreement, National Surety refused payment arguing that they were not liable as per terms in their contract which stated that they would only be responsible if there was an intent of causing loss to the insured or obtaining improper personal financial gain. The court held in favor of Jenkins (the receiver) stating that despite no evidence showing direct benefit received by these dishonest employees or intentionality behind their actions leading directly towards monetary loss for the insured party i.e., Bank; still since these acts were undeniably fraudulent and did cause substantial damage - thus making them fall within purview of what is generally understood as 'fraudulent' activity – hence insurer should bear responsibility.

In the dissenting opinion for Jenkins, Receiver, et al. v. National Surety Company, Justice Stone argued that the majority's decision was inconsistent with established principles of contract law and unjustly enriched one party at another's expense. He contended that when a surety company guarantees a contractor’s performance on a construction project and subsequently takes over the project due to contractor default, it should not be allowed to profit from its own breach by retaining any surplus funds after completing the work under budget. Instead, he believed such excess funds should go back to the original contracting party (in this case, an estate in receivership). In his view, allowing otherwise would create perverse incentives for sureties to deliberately cause defaults or perform substandard work in order to pocket leftover money – outcomes clearly contrary to public policy interests and basic fairness.