SAFECO INS CO v MUNROE v COGSWE

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No. 12505 I N THE SUPREME COURT O THE STATE O M N A A F F OTN SAFECO INSURANCE COMPANY, a corporation, P l a i n t i - f f and A p p e l l a n t , .................... Defendants and Respondents. ----------------------------- SAFECO INSURANCE COMPANY, a corporation, Third P a r t P l a i n t i f f , COGSWELL AGENCY, I N C . , a Corporation, Third P a r t y Defendant and Respondent. Appeal from: D i s t r i c t Court of t h e E i g h t h J u d i c i a l D i s t r i c t , Bradford, Judge p r e s i d i n g Honorable Truma~r . Counsel o f Record : For Appellant : Loble, P i c o t t e , Loble, Pauly and Sternhagen, Helena, Montana Gene A , P i c o t t e a r g u e d , Helena, Montana For Respondent : .- D z i v i , Conklin, Johnson & Nybo, G r e a t F a l l s , Montana Louis D. Nybo a r g u e d , G r e a t F a l l s , Montana Church, H a r r i s , Johnson & Williams, Great F a l l s , Montana C h a r l e s C. Love11 a r g u e d , G r e a t F a l l s , Montana Smith, Emmons & B a i l l i e , Great F a l l s , Montana J a r d i n e , Stephenson, Blewett & Weaver, Great F a l l s , Montana J a c k L. Lewis a r g u e d , G r e a t F a l l s , Montana Submitted: F i l e d :DCT I ¬ 1974 Decided: September 11, 1974 # C f 16 1974 Mr. J u s t i c e Wesley C a s t l e s d e l i v e r e d t h e Opinion o f t h e C o u r t . T h i s i s an a p p e a l from a judgment of t h e d i s t r i c t c o u r t of t h e e i g h t h j u d i c i a l d i s t r i c t , i n and f o r t h e County of Cascade, which r e n d e r e d p a r t i a l summary judgment i n f a v o r o f d e f e n d a n t , D. E. Munroe, and a g a i n s t p l a i n t i f f , S a f e c o I n s u r a n c e Company. O November 5 , 1971, John D . Buchanan f i l e d s u i t i n d i s n t r i c t c o u r t i n Cascade County a g a i n s t David E . Munroe. The amend- ed c o m p l a i n t i n s a i d c a u s e s t a t e s g e n e r a l l y t h a t Harold S c h i l l i n g was f a r m i n g Buchananls l a n d n o r t h of Cascade and t h a t S c h i l l i n g o r d e r e d s e e d wheat from Munroe who r e p r e s e n t e d t h a t it was s p r i n g wheat, b u t i t was i n f a c t w i n t e r wheat. The c o m p l a i n t f u r t h e r a l l e g e s t h a t Munroe t o l d S c h i l l i n g t o r e p l a n t w i t h s p r i n g wheat a n d , a l t h o u g h t h i s was done, Buchanan s u s t a i n e d l o s s e s e q u i v a l e n t t o t h e c o s t s of r e p l a n t i n g and t h i r t y b u s h e l s p e r a c r e f o r o n e hundred f o r t y - n i n e a c r e s f o r which Munroe i s l i a b l e . On J a n u a r y 4 , 1972, Viggo 0 . Andersen and E i n e r G. Hovland, co-partners, doing business a s Andersm & Hovland, f i l e d s u i t i n d i s t r i c t c o u r t i n Cascade County a g a i n s t Munroe Ranch Co., Inc. The c o m p l a i n t i n s a i d c a u s e s t a t e s g e n e r a l l y t h a t Munroe a g r e e d t o s e l l and d e l i v e r s p r i n g wheat s e e d t o AndersRn & Hovland and t h e same was p l a n t e d by them b u t i t was a c t u a l l y w i n t e r wheat which d i d n o t come up r e s u l t i n g i n a c r o p l o s s , expense of d e s t r o y i n g a c r o p t o p r o t e c t t h e n e x t c r o p from d i s e a s e , f u t u r e a d d i t i o n a l f a r m i n g e x p e n s e , and f u t u r e c r o p l o s s , o r , i n t h e a l t e r n a t i v e , t h e a l l e g e d damages a r e s a i d t o be measured by c o s t o f s e e d , c o s t o f t r e a t i n g s e e d , c o s t of t r a n s p o r t i n g s e e d , c o s t o f p r e p a r i n g s o i l t o r e c e i v e s e e d , c o s t o f s e e d i n g and f e r t i l i z i n g , c o s t of s p r a y i n g and t o p - d r e s s i n g , l o s s of use of lands f o r one c r o p season, e x p e n s e of d e s t r o y i n g c r o p t o p r o t e c t n e x t c r o p from d i s e a s e , f u t u r e a d d i t i o n a l f a r m i n g e x p e n s e , and f u t u r e l o s s of p r o d u c t i v i t y . Munroe, t h e d e f e n d a n t i n t h e two b a s i c c a s e s d e s c r i b e d above, purchased a "Growers & Ranchers" policy of insurance from Safeco Insurance Company, the plaintiff in the instant action. Listed on the policy as the "insured" is "D. E, Munroe, Donald G. Munroe and David M. Munroe, DBA Munroe Ranch Company" The policy had a three year term from August 20, 1970 to August 20 1973. The portions of the policy pertinent to this appeal are as follows: LIABILITY COVERAGE "The company will pay all damages the insured is obligated to pay for liability imposed by law: (1) upon him; or ( 2 ) upon another, but assumed by him under a contract, because of bodily injury or property damage to which this insurance applies, caused by an occurrence. The company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient. The company shall not be obligated to pay any claim or judgment or defend any suit after the applicable limits of the company's liability has been exhausted by payment of judgments or settlements. "Exclusions "This insurance does not apply: " (d) to property damage * * * (6) to the named insured's products arising out of such products or any part of such products * * * "DEFINITIONS "'damages' includes damages for death and for care and loss of services resulting from bodily injury and damages for loss of use of property resulting from property damage; "'named insured's products1 means goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, including any container thereof (other than a vehicle), but !named insured's products' shall not include a vending machine or any property o t h e r than such container, rented t o o r located f o r use of others but not sold * * * . " ' p r o p e r t y damage1 means i n j u r y t o o r d e s t r u c t i o n of t a n g i b l e p r o p e r t y * * *." Safecocontends h e r e a d a l l e g e d i n i t s complaint t h a t t h e p o l i c y c o v e r a g e was n e v e r i n t e n d e d t o i n s u r e a g a i n s t l o s s e s res u l t i n g from r e s a l e of p r o d u c t s s u c h a s t h e s e l l i n g o f s e e d wheat t h e i n s u r e d happened t o have on hand; and t h a t , f o r s u c h c o v e r a g e , s u c h p e r s o n s w i s h i n g t o be s o i n s u r e d must p u r c h a s e t h e " m i s d e l i v e r y of s e e d " endorsement a v a i l a b l e a t a d d i t i o n a l premium. However, i t i s u n c o n t r a d i c t e d by S a f e c o t h a t Munroe was n e v e r o f f e r e d such a n endorsement nor t h a t Munroe was even aware of t h e e x i s t e n c e of s u c h a n endorsement. Munroe t e n d e r e d b o t h c o v e r a g e and d u t y t o d e f e n d t h e two aforestated actions. d e n i e d by S a f e c o . Both c o v e r a g e and t h e d u t y t o d e f e n d were Safeco then brought t h e i n s t a n t d e c l a r a t o r y judgment a c t i o n a s k i n g t h e c o u r t t o c o n s t r u e t h e p o l i c y p r o v i s i o n s and t o d e c l a r e t h a t S a f e c o h a s n o t c o n t r a c t e d t o c o v e r t h e r i s k s o r t h e damages w i t h i n t h e c o n t e m p l a t i o n o f t h e two b a s i c a c t i o n s and h a s no d u t y t o d e f e n d them. S a f e c o b r o u g h t Harold J . S c h i l l i n g and J i m S c h i l l i n g i n t o t h e c a s e as defendants because a t t h a t t i m e Safeco b e l i e v e d t h a t t h e S c h i l l i n g s c l a i m e d t o have s u f f e r e d a l o s s a r i s i n g o u t o f t h e same o r s i m i l a r o c c u r r e n c e and were c l a i m i n g t h a t t h e y a l s o w e r e e n t i t l e d t o r e c o v e r a g a i n s t Munroe. O A p r i l 1 8 , 1973, t h e n S c h i l l i n g s b r o u g h t a n a c t i o n which i s s i m i l a r t o t h e f i r s t two basic actions. I t would a p p e a r t h a t t h e outcome of t h i s a p p e a l w i l l d e t e r m i n e a l s o whether o r n o t t h e r e i s c o v e r a g e and d u t y t o d e f e n d under t h i s new a c t i o n b r o u g h t by t h e S c h i l l i n g s . I n t h e i n s t a n t c a s e , defendants f i l e d motions t o dismiss and t o s t r i k e which were r u l e d upon by t h e d i s t r i c t c o u r t . The d i s t r i c t court ordered Safecols a l l e g a t i o n s r e f e r r i n g t o t h e " m i s d e l i v e r y of s e e d " endorsement s t r i c k e n from i t s c o m p l a i n t . The d e f e n d a n t s t h e n answered and c o u n t e r c l a i m e d a g a i n s t S a f e c o -- s e e k i n g t o a v o i d t h e p o l i c y l i m i t s on t h e grounds, i n t e r a l i a , of n e g l i g e n c e and e s t o p p e l . Safeco then brought a t h i r d p a r t y complaint a g a i n s t t h e Cogswell Agency, I n c . , o f G r e a t F a l l s , who had s o l d t h e p o l i c y of S a f e c o , a l l e g i n g , i n t e r a l i a , t h a t Cogswell had r e p r e s e n t e d t o d e f e n d a n t Munroe t h a t i t was a u t h o r i z e d t o a c t f o r S a f e c o i n ways i n which it was n o t a u t h o r i z e d t o a c t , i n d i c a t i n g t h e r e was c o v e r a g e f o r t h e r e s u l t s o f t h e s e e d wheat mix up when t h e r e was n o t . Cogswell d e n i e s t h i s a l l e g a t i o n . T h e r e a f t e r Cogswell moved f o r summary judgment and Munroe moved f o r a p a r t i a l summary judgment. The d i s t r i c t c o u r t i s s u e d i t s summary judgment which i n c l u d e d f i n d i n g s of f a c t and c o n c l u s i o n s of law h o l d i n g t h a t t h e r e was c o v e r a g e and t h e r e was a c o r r e s ponding d u t y t o d e f e n d . I t i s from t h i s d e c i s i o n of t h e d i s t r i c t c o u r t t h a t Safeco appeals. The d i s t r i c t c o u r t d e n i e d C o g s w e l l ' s motion f o r summary judgment on t h e t h i r d - p a r t y c o m p l a i n t and made no r u l i n g on t h e c o u n t e r c l a i m s of d e f e n d a n t s . Those i s s u e s a r e n o t now b e f o r e t h i s C o u r t . To s t o p t h e c o n t i n u a n c e of t h e two b a s i c a c t i o n s pending t h e a p p e a l of t h e i n s t a n t a c t i o n , S a f e c o a c q u i r e d from t h e d i s t r i c t c o u r t an order s t a y i n g proceedings i n those a c t i o n s . The defendants i n t h e i n s t a n t a c t i o n t h e r e a f t e r received a modificat i o n o f t h e s t a y of p r o c e e d i n g s t o t h e e f f e c t t h a t d i s c o v e r y i n t h e two b a s i c a c t i o n s c o u l d c o n t i n u e . Safeco then appealed t h e o r d e r modifying t h e s t a y o f p r o c e e d i n g s a l l o w i n g d i s c o v e r y . This Court t h e n e n t e r e d i t s o r d e r s t a y i n g d i s c o v e r y i n t h e two b a s i c a c t i o n s pending t h i s a p p e a l . Safeco presents f i v e i s s u e s f o r our consideration: (1) Whether, b e c a u s e t h e c o v e r a g e i s o n l y f o r i n j u r y t o o r d e s t r u c t i o n of " t a n g i b l e " p r o p e r t y , t h e d i s t r i c t c o u r t e r r e d i n h o l d i n g t h a t t h e a l l e g e d l o s s was c o v e r e d by t h e p o l i c y ? (2) Whether l i a b i l i t y c o v e r a g e f o r p r o p e r t y damages a r i s i n g o u t of i n s u r e d ' s p r o d u c t s was e x c l u d e d by t h e p o l i c y ? (3) Whether t h e d i s t r i c t c o u r t e r r e d i n s t r i k i n g t h e a l l e g a t i o n s i n S a f e c o ' s c o m p l a i n t c o n c e r n i n g t h e " m i s d e l i v e r y of s e e d " endorsement? (4) Whether t h e r e i s a d u t y t o d e f e n d t h e u n d e r l y i n g cases i n d i s t r i c t court? (5) Whether t h e a p p e a l from t h e d i s t r i c t c o u r t ' s o r d e r modifying t h e s t a y of p r o c e e d i n g s was n e c e s s a r y t o p r o t e c t S a f e c o ? W e answer t h e f i r s t t h r e e q u e s t i o n s i n t h e n e g a t i v e , t h e f o u r t h i n t h e a f f i r m a t i v e and t h e f i f t h we h o l d t o be moot. We a f f i r m t h e d e c i s i o n of t h e d i s t r i c t c o u r t . F o r p u r p o s e s of d i s c u s s i o n o f t h e f i r s t i s s u e w e would l i k e t o s e t o u t t h e f i r s t s e n t e n c e of t h e c o v e r a g e p r o v i s i o n a s i t would a p p e a r i f t h e i r r e l e v a n t p o r t i o n s w e r e d e l e t e d and t h e d e f i n i t i o n s incorporated therein: The company w i l l pay a l l damages, i n c l u d i n g damages f o r l o s s of u s e of p r o p e r t y r e s u l t i n g from i n j u r y t o o r destruction of tangible property, t h e insured i s o b l i g a t e d t o pay f o r l i a b i l i t y imposed by law upon him b e c a u s e of i n j u r y t o o r d e s t r u c t i o n o f t a n g i b l e p r o p e r t y t o which t h i s i n s u r a n c e a p p l i e s , c a u s e d by a n o c c u r r e n c e . The i n s u r a n c e a p p l i e d t o p r o d u c t l i a b i l i t y c o v e r a g e a l t h o u g h , a s l a t e r d i s c u s s e d , S a f e c o c o n t e n d s t h a t s u c h c o v e r a g e was l i m i t e d t o b o d i l y damages, p r o p e r t y damage b e i n g e x c l u d e d . Safeco contends t h a t whatever i n j u r e s s u f f e r e d by Buchanan and Andersen & Hovland, a s a l l e g e d i n t h e i r c o m p l a i n t s , were i n j u r i e s t o " i n t a n g i b l e " prop e r t y and n o t i n j u r i e s t o " t a n g i b l e " p r o p e r t y . W find t h i s contention e t o be w i t h o u t m e r i t . W e f i n d no e r r o r i n and a d o p t t h e f i n d i n g o f f a c t No. 8 of t h e d i s t r i c t c o u r t ; "8. That i f t h e c l a i m a n t s a g a i n s t Munroe a s a f o r e d e s c r i b e d s u f f e r e d any l o s s by v i r t u e o f h a v i n g r e c e i v e d and p l a n t e d t h e wrong t y p e of s e e d wheat, it f o l l o w s , a s a m a t t e r of common knowledge, t h a t t h e l a n d i n which t h e s e e d wheat was p l a n t e d would have been damaged i n t h a t s a i d l a n d would have l o s t a p o r t i o n o f i t s r e t a i n e d m o i s t u r e , would have l o s t a p o r t i o n of i t s ret a i n e d f e r t i l i z e r , weeds would have grown t h e r e o n where no c r o p had grown, e r o s i o n would have o c c u r r e d , s a i d l a n d would have t o have been rec u l t i v a t e d i n o r d e r t o render it s u i t a b l e f o r t h e p l a n t i n g of a n o t h e r c r o p o f t h e same o r s i m i l a r n a t u r e , and t h a t i f l i t t l e o r no c r o p grew, t h e c l a i m a n t s would have r e c e i v e d l i t t l e o r no compensation by v i r t u e o f h a v i n g l o s t a c r o p , and would have s u f f e r e d l o s s of u s e o f t h e i r l a n d s I' . Although S a f e c o t a k e s f i v e and one-half pages o f i t s b r i e f t o d e f i n e t h e word " t a n g i b l e 1 ' , w e f i n d i t t o be beyond d i s p u t e t h a t a Montana wheat f i e l d a n d t h e c r o p t h e r e i n , i s tangible property. The d i s t r i c t c o u r t c l e a r l y found i n j u r y t o t h e wheat f i e l d s and t h u s i n j u r y t o t a n g i b l e p r o p e r t y . The a l l e g a t i o n s of c o s t s of r e p l a n t i n g , t h i r t y b u s h e l s p e r a c r e f o r one hundred f o r t y - n i n e a c r e s , expense o f d e s t r o y i n g a c r o p t o p r o t e c t t h e n e x t c r o p , c o s t of p r e p a r i n g s o i l , e t c . , is not damage t o " i n t a n g i b l e 1 1p r o p e r t y , a s S a f e c o c o n t e n d s , b u t i s merely t h e measure of t h e damage t o t h e " t a n g i b l e " wheat f i e l d s . Once i n j u r y t o t a n g i b l e p r o p e r t y i s found, t h e p o l i c y c l e a r l y s t a t e s t h a t i t a l s o c o v e r s damages f o r l o s s of u s e of p r o p e r t y r e s u l t i n g from i n j u r y t o t a n g i b l e p r o p e r t y . The p l a i n , c l e a r , unambiguous meaning o f t h e l a n g u a g e i n t h e p o l i c y i s t h a t once i t h a s been found t h a t t a n g i b l e p r o p e r t y h a s been damaged, t h e r e i s i n s u r a n c e c o v e r a g e f o r a l l damages bec a u s e t h e t e r m damages i s used w i t h o u t l i m i t a t i o n and, i n f a c t , i s expanded t o i n c l u d e damages f o r l o s s o f u s e , The i s s u e t h e n becomes whether o r n o t S a f e c o t s p o l i c y language i s s u f f i c i e n t l y s t r o n g enough t o e x c l u d e i n s u r a n c e c o v e r a g e f o r c o n s e q u e n t i a l damages--loss of p r o f i t s . I t might b e t h a t l o s s o f p r o f i t s i s a n i t e m o f i n t a n g i b l e damage, However, i t i s of u t m o s t i m p o r t a n c e t o n o t e t h a t t h e p o l i c y d o e s n o t , by a n y s t r e t c h o f t h e imagina t i o n , r e q u i r e t h a t t h e r e be t a n g i b l e damage t o t a n g i b l e property. C l e a r l y , it was n o t S a f e c o ' s i n t e n t i o n t o e x c l u d e conse- q u e n t i a l damages o r t h e y would have s a i d s o i n t h e p o l i c y . S a f e c o , i n a t t e m p t i n g t o d i s t i n g u i s h , among o t h e r s , Wells Labberton v . G e n e r a l C a s u a l t y Co.'of America, 53 Wash.2d 1 8 0 , 332 P.2d 250, and St. P a u l F i r e G r a i n Co., & 365 F.2d 361, 368, Marine I n s u r a n c e Co. v . N o r t h e r n (8th C i r . ) , argues t h a t t h e courts t h e r e were n o t f a c e d w i t h p o l i c y l a n g u a g e l i m i t i n g c o v e r a g e t o i n j u r y t o "tangible" property. W deem it u n n e c e s s a r y t o go i n t o e t h e f a c t u a l bases o r i s s u e s of t h o s e c a s e s , noting merely t h a t t h e y were s i m i l a r t o t h e i n s t a n t a p p e a l and t h e l o s s e s were h e l d c o v e r e d by t h e p o l i c i e s . Because t h e p o l i c i e s i n t h o s e c a s e s covered i n j u r i e s t o "property" r a t h e r than i n j u r i e s t o " t a n g i b l e property", Safeco reasons t h a t those c a s e s are not a p p l i c a b l e . However, S a f e c o ' s argument f a l l s one s t e p s h o r t of t h e mark. To d e t e r m i n e whether e a c h p a r t i c u l a r c a s e i s a p p l i c a b l e o r n o t , t h e c a s e must be examined t o d e t e r m i n e whether t h e i n j u r y i n v o l v e d was t o t a n g i b l e o r i n t a n g i b l e p r o p e r t y . If that injury is t o t a n g i b l e p r o p e r t y , t h e n t h e a d d i t i o n o f t h e word " t a n g i b l e " t o t h e d e f i n i t i o n of p r o p e r t y would have no e f f e c t on t h e r u l e of t h e case. I n e a c h of t h e above c a s e s , and i n t h e i n s t a n t a p p e a l , t h e i n j u r y w a s t o a wheat f i e l d and a wheat f i e l d i s t a n g i b l e p r o p e r t y . And, d e s p i t e S a f e c o ' s d e n i a l s t h a t t h e i n j u r i e s i n Wells Labberton and N o r t h e r n Grain were i n j u r i e s t o " t a n g i b l e " p r o p e r t y , t h e Court i n N o r t h e r n Grain s a i d , a t p. 366. " J u s t a s t h e diminution i n value of t h e buildi n g s i n H a u e n s t e i n I H a u e n s t e i n v . S t . PaulMercury Indem. Co,, 2 4 2 Minn, 354, 65 N.W.2d 1221 and Dakota Block IDakota Block v. Western Cas. & S u r e t y Co., 8 1 S.D. 213, 132 N.W.2d 8261 c o n s t i t u t e d p r o p e r t y damage w i t h i n t h e a m b i t o f t h e i n s u r i n g agreement, s o a l s o d o e s t h e diminu t i o n i n t h e p r o d u c t i v i t y o f t h e wheat c r o p , a s t h e r e s u l t o f an i n f e r i o r and d e f i c i e n t q u a l i t y of s e e d wheat, c o n s t i t u t e p r o p e r t y damage w i t h i n t h e c o v e r a g e of t h i s p o l i c y . The c r o p s r a i s e d by N o r t h e r n ' s c u s t o m e r s were no less p h y s i c a l prope r t i e s t h a n t h e b u i l d i n g s i n H a u e n s t e i n and Dakota Block. " (Emphasis s u p p l i e d . ) W h o l d t h a t t h e i n j u r i e s a l l e g e d i n t h e c o m p l a i n t s of e Buchanan and Andersen & Hovland a r e i n j u r i e s t o t a n g i b l e p r o p e r t y w i t h i n t h e c o v e r a g e of t h e p o l i c y of i n s u r a n c e s o l d by S a f e c o t o Munroe . The second i s s u e r a i s e d c o n c e r n s t h e f o l l o w i n g e x c l u s i o n : "This insurance does n o t apply: ' I * * * " ( d ) t o p r o p e r t y damage * * * ( 6 ) t o t h e named i n s u r e d ' s products a r i s i n g o u t of such products o r any p a r t of s u c h p r o d u c t s * * *." S a f e c o a s k s t h i s C o u r t t o c o n s t r u e t h e language of t h e e x c l u s i o n by r e a d i n g it i n t h e a l t e r n a t i v e : T h i s i n s u r a n c e d o e s n o t a p p l y t o (a) p r o p e r t y damage of t h e named i n s u r e d ' s p r o d u c t s - ( b ) or p r o p e r t y damage a r i s i n g o u t o f s u c h p r o d u c t s o r any p a r t of s u c h p r o d u c t s . A s s o c o n s t r u e d , t h e i n j u r y t o t h e wheat f i e l d s o b v i o u s l y a r o s e o u t o f Munroe's p r o d u c t , t h e s e e d , t h e e x c l u s i o n i s a p p l i c a b l e , and t h e r e i s no c o v e r a g e under t h e p o l i c y . P e r h a p s i f t h e ex- c l u s i o n w e r e p u n c t u a t e d o r p h r a s e d i n a n o t h e r manner it would have t h a t e f f e c t . But, a s w r i t t e n , t h e e x c l u s i o n h a s r e f e r e n c e s o l e l y t o p r o p e r t y damage t o t h e named i n s u r e d ' s p r o d u c t s . By s u b s t i t u t i n g t h e p o l i c y d e f i n i t i o n s f o r " p r o p e r t y damage" and "named i n s u r e d ' s p r o d u c t s " , t h e e x c l u s i o n r e a d s : This insurance does n o t apply t o i n j u r y t o o r d e s t r u c t i o n of t a n g i b l e p r o p e r t y t o t h e goods - 9 - products manufactured, sold, handled distributed by the named insured or by others trading under his name including any container thereof arising out of such products or any part of such products. The court in Northern Grain said, at page 3 6 8 : "Finally, St. Paul contends that irrespective of any 'injury to * * * property' which may conceivably exist, coverage is nevertheless precluded under the exclusion of 'injury to or destruction of * * * ( 3 ) any goods, products or containers thereof manufactured, sold, handled or distributed by the Insured * * *.I Thus St. Paul equates the wheat crop of Northern's customers with the seed wheat sold by Northern, and refuses to recognize a distinct and separate identity between the two.' "We refuse to accede to the argument that the wheat crop was merely the seed in changed form and therefore encompassed within the exclusionary clause. By virtue of the germination process involved in the production of wheat a transformation did, in fact, occur so as to constitute the wheat crop a separate and distinct entity from the original seed wheat. "Considered in its proper perspective, the function of the exclusionary clause denying coverage of damages for 'injury to or destruction of * * * any goods, products or containers thereof manufactured, sold, handled or distributed by the Insured * * * ' is clear. Such a provision denies coveraqe to an insured for damaqes occasioned to his own qoods or work product by reason of its internal defectiveness. The exclusionary clause, however, has no reference to damage to property other than the insured's qoods or products or other accidental loss resulting from the defective condition of the insured's work product." (Emphasis supplied.) Although we have no knowledge of why exclusion ( d ) ( 6 ) was inserted in the instant policy, it appears likely that it was for the reason stated by the court in Northern Grain. Safeco's third contention is that the district court erred in granting defendants' motion to strike from the amended complaint the allegations regarding the existence of a so-called "Misdelivery of Seed" endorsement. The allegation which was stricken by the district court reads as follows: - 10 - "Plaintiff had available for inclusion in such a policy upon payment of an additional premium therefor its 'Misdelivery of Seed' endorsement, a copy of which is attached marked 'Exhibit B'. Defendant ID. E. Munroe,] did not pay for and did not receive such a 'Misdelivery of Seed' endorsement and the same is not a part of the contract of insurance entered between the parties." There is no contention advanced by Safeco that Munroe was offered such an endorsement or was even aware of the existence of such an endorsement. Yet it is advocated by Safeco that this endorsement, or its absence, is evidence of the intention of the parties to the insurance contract. Section 13-705, R.C.M. 1947, provides: "When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; subject, however, to the other provisions of this chapter." This statute makes it clear that, in Montana, a contract is to be interpreted within its four corners and not by reference to extraneous matters, as Safeco would have this Court do. In Home Ins. Co. v. Pinski Bros., Inc., 156 Mont. 246, 258, 479 P.2d 274, we stated: " * * * Where the policy is unambiguous, the terms and coverage of the policy must be determined by its language alone and extrinsic evidence is inadmissible to establish its meaning. Section 13-704, R.C.M. 1947; James v. Prudential Ins. Co., 131 Mont. 473, 312 P.2d 125, Kansas City Fire & Marine Ins. Co. v. Clark (D.C. Mont.) , 217 F.Supp. 231 (1963) affirmed 9 Cir., 329 F.2d 647; Glacier Gen. Assur. Co. v. State Farm Insurance Co., 150 Mont. 452, 436 P.2d 533. * * * " We hold that the policy provisions in issue were not ambiguous and that the district court properly struck the allegations in Safeco's amended complaint regarding the "Misdelivery of Seed" endorsement. Finding coverage under the policy, Safeco's duty to defend the actions brought by Buchanan and Andersen & Hovland against Munroe follows from the language of the policy: " * * * The company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage * * *," Safeco's fifth argument goes to the question of whether or not the district court erred in making its order allowing discovery proceedings to continue in the two basic actions pending the appeal of this action. However, since no discovery pro- ceedings have taken place since this Court's order staying the same, this question is moot. Because of the view we have taken of the foregoing issues, we deem it unnecessary to discuss any of the other issues raised by the parties. The summary judgment of the district court is affirmed. i We concur: ,"i" 'thief Justice

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