Banks

Introduction

Polaris Insurance Company appeals the order of the district court granting summary judgment in favor of Aqua-Marine Constructors, in Aqua-Marine’s action against Polaris on a surety bond executed by Michael Banks and Polaris in favor of Aqua-Marine.

I. Facts

Aqua-Marine Constructors, an Oregon corporation, owns an oceangoing barge, the “Aqua 242.” In May 1992 Aqua-Marine entered into a bareboat charter agreement with Michael Banks, a resident of California. Under the terms of the charter party, Banks was to take possession of the barge at Everett, Washington, make monthly charter hire payments in the amount of $24,000.00, and redeliver the barge to Aqua-Marine at Everett. The charter party obligated Banks to at least three months’ hire, and further required him to obtain a bond securing the payment of the charter hire and the proper redelivery of the barge at the termination of the charter period. 1 Banks did obtain a performance bond which he and Polaris Insurance Company executed on May 15, 1992, in favor of Aqua-Marine. 2 Polaris is an insurance carrier incorporated under the laws of the Republic of Costa Rica.

By the beginning of August 1992, Banks was in…