In the case of People of Sioux County, Nebraska v. National Surety Company in 1927, the Supreme Court was tasked with determining whether a surety company could be held liable for losses incurred due to embezzlement by a county treasurer. The National Surety Company had issued an official bond for the treasurer who subsequently misappropriated public funds. The court ruled that under Nebraska law, bonds are considered contracts and therefore subject to contract law principles which stipulate that ambiguity should be resolved against the party drafting it - in this case, the surety company. Therefore, despite arguments from National Surety claiming they were not responsible as their bond only covered faithful execution of duties and not fraudulent acts like embezzlement; because there was ambiguity about what constituted "faithful execution", it was interpreted broadly enough to include protection against such frauds committed by bonded officials. Thusly ruling in favor of Sioux County and holding National Surety liable for covering those losses.

The dissenting opinion in the case of People of Sioux County, Nebraska v. National Surety Company argued that the majority's decision to hold a surety company liable for losses incurred due to fraudulent activity by county officials was incorrect. The dissent contended that such liability should only be imposed if there is clear evidence demonstrating that the surety company had knowledge or reason to suspect fraudulent activities and failed to act accordingly. They believed this interpretation would better align with common law principles governing sureties' obligations and liabilities, which typically require some degree of culpability on their part before they can be held responsible for others' misconduct. In contrast, the majority ruling effectively transformed these companies into insurers against any form of dishonesty by public officers without requiring proof they were aware or should have been aware of such behavior.