The United States Supreme Court case, United States Fidelity & Guaranty Company v. Wooldridge, Receiver of the National Bank of Cleburne (1924), revolved around a dispute over liability for losses suffered by the National Bank of Cleburne due to fraudulent activities committed by its employees. The bank had taken out an indemnity bond with US Fidelity & Guaranty Co., which was supposed to cover such losses. However, when the bank attempted to claim on this bond after discovering that one of its cashiers had been embezzling funds, US Fidelity refused to pay out on grounds that the bank's directors were aware or should have been aware of these fraudulent activities and failed in their duty to prevent them. The court ruled in favor of U.S. Fidelity & Guaranty Co., stating that if a director has knowledge about dishonest acts and does not take action against it then he is also liable for those actions as per terms mentioned in fidelity bonds.

The dissenting opinion in the case of United States Fidelity & Guaranty Company v. Wooldridge, Receiver of The National Bank of Cleburne argued that the majority's decision was inconsistent with previous rulings and principles established by the court. They contended that a receiver should not be allowed to recover from a surety company for losses incurred due to fraudulent acts committed by bank officials before they became bonded by said company. This is because it would unfairly place responsibility on an entity which had no knowledge or control over these prior actions. Furthermore, they pointed out that this ruling could potentially discourage companies from providing bonds for receiverships if they could be held liable for past misconducts unknown to them at the time of bonding agreement.