In the case of Title Guaranty & Surety Company v. United States, to the use of Harlan & Hollingsworth in 1912, the U.S Supreme Court was tasked with determining whether a surety company could be held liable for unpaid wages owed by a bankrupt contractor under an agreement made with the federal government. The court ruled that while sureties are generally only responsible for losses directly related to their principal's default on contractual obligations, they can also be held accountable for additional damages if it is explicitly stated in their contract. In this instance, since there was no explicit provision holding them accountable for workers' wages in case of bankruptcy or insolvency of the contractor within their bond agreement with the government, they were not found liable.

In the dissenting opinion for Title Guaranty & Surety Company v. United States, to the use of Harlan & Hollingsworth, Justice Holmes disagreed with the majority's interpretation of a surety bond contract between a shipbuilding company and its subcontractor. He argued that it was not reasonable to hold the surety liable for damages incurred by delays in performance when such delays were caused by factors beyond control of either party involved in this case. The justice believed that these unforeseen circumstances should have been considered as an excuse for non-performance under common law principles governing contracts. Furthermore, he contended that there was no explicit provision within their agreement stipulating penalties or liabilities arising from such uncontrollable events causing delay in completion of work contracted out to third parties.