In the case of Maryland Casualty Co. v. Pacific Coal & Oil Co., the Supreme Court ruled on a dispute involving an insurance policy and its coverage for damages caused by oil leaks from underground tanks owned by Pacific Coal & Oil Company (Pacific). The insurer, Maryland Casualty Company (Maryland), argued that it was not liable to cover these damages as they were not sudden or accidental but rather occurred over time due to normal wear and tear which is typically excluded in such policies. However, Pacific contended that the damage was indeed sudden and accidental because they had no knowledge of any leakage until after substantial contamination had already occurred. The court sided with Pacific, ruling that even though the leak may have been gradual, it could still be considered "sudden" within the context of insurance law if it happened without prior awareness or expectation. Therefore, Maryland's refusal to pay out under their policy constituted a breach of contract.

In the dissenting opinion for Maryland Casualty Co. v. Pacific Coal & Oil Co., Justice Frankfurter argued that the majority's decision was based on an incorrect interpretation of the contract between Pacific Coal and its insurance provider, Maryland Casualty Company. He contended that under a proper reading of their agreement, liability should not be imposed on Maryland Casualty for damages resulting from a fire at one of Pacific Coal's properties because it did not fall within the scope of coverage specified in their policy. Furthermore, he disagreed with the majority’s view that ambiguity in insurance contracts should always be resolved against insurers; instead arguing this principle should only apply when there is genuine uncertainty about what terms were agreed upon by both parties involved.