In the United States Fidelity & Guaranty Company v. Guenther case of 1929, the Supreme Court ruled in favor of Guenther, who had filed a claim against his employer's insurance company for injuries sustained at work. The court held that under New York law, an injured employee could directly sue their employer's insurer if they were unable to obtain compensation from their employer due to insolvency or bankruptcy. This was despite arguments by the United States Fidelity & Guaranty Company (USF&G) that it should not be liable as its contract was with the bankrupted employer and not with individual employees. The decision established a precedent allowing direct action against insurers in certain circumstances where employers are unable to meet workers' compensation obligations.

In the dissenting opinion for the United States Fidelity & Guaranty Company v. Guenther case, it was argued that the majority's decision to uphold a lower court ruling in favor of Guenther contradicted established legal principles. The dissenting justices believed that an insurance company should not be held liable for damages if its insured party had acted with criminal intent or violated statutory law, as was alleged in this case. They contended that such liability would undermine public policy by encouraging illegal behavior and providing financial protection to those who engage in it. Furthermore, they disagreed with the majority's interpretation of ambiguous terms within insurance contracts, arguing instead for a more literal reading which would have exempted USF&G from paying out on Guenther’s claim.