In the 1933 case Lewis, Receiver v. Fidelity & Deposit Co. of Maryland, the U.S Supreme Court dealt with a dispute over an insurance claim related to bank embezzlement. The First National Bank of Bethany had been robbed by its cashier and sought compensation from its insurer, Fidelity & Deposit Company of Maryland (F&D). However, F&D refused to pay on grounds that the bank had not complied with certain conditions in their policy agreement - specifically that it failed to promptly notify them about changes in employees' duties which increased risk exposure. The court ruled against Lewis (the receiver for the insolvent bank) stating that these conditions were reasonable and necessary for insurers to manage risks effectively; hence they must be strictly adhered to by insured parties. Therefore, since there was evidence showing negligence on part of the bank regarding this requirement, it forfeited any right it might have otherwise had under its bond coverage.

In the dissenting opinion for Lewis v. Fidelity & Deposit Co. of Maryland, Justice Cardozo disagreed with the majority's decision to hold a surety company liable for losses incurred due to fraudulent acts committed by an employee who was bonded by that company. He argued that under common law principles and according to the terms of the bond agreement itself, liability should only be imposed if there is clear evidence showing that losses were directly caused by dishonest actions covered in the bond contract. In this case, he believed such proof was lacking because it could not be definitively established whether or how much loss resulted from fraud as opposed to other factors like market conditions or poor business decisions made by management. Therefore, he felt it was unjust and contrary to legal precedent to impose full liability on a surety without sufficient causal connection between alleged misconduct and actual harm suffered.