In the case of Maryland Casualty Company v. United States (1919), the Supreme Court ruled that a surety company, which had issued performance bonds for a contractor working on federal projects, was liable to pay the U.S. government under those bonds even though it had not directly caused the contractor's default. The court held that as long as there was an underlying contractual obligation between the principal and obligee (in this case, between the contractor and government), then any breach of that contract would trigger liability for sureties who guaranteed its performance. This decision clarified how risk is allocated in public construction contracts and reinforced principles of suretyship law – namely, that sureties are bound by their guarantees regardless of whether they were at fault for any breaches.

In the dissenting opinion for Maryland Casualty Company v. United States, Justice McReynolds expressed his disagreement with the majority's interpretation of the Miller Act. He argued that a surety company should not be held liable for unpaid wages and material costs incurred by a subcontractor on a federal construction project unless it had explicitly agreed to this in its bond agreement. In his view, interpreting the law otherwise would unfairly expand the liability of surety companies beyond what they had contractually agreed to cover. Furthermore, he contended that such an interpretation was inconsistent with common law principles governing contracts and bonds. Thus, he believed that Maryland Casualty Company should not be required to pay these additional costs under its performance bond.