General Ins. Co. of America v. Gauger, 1282--III

• Decision Date: 16 July 1975
• Docket Number: No. 1282--III,1282--III
• Citation: 13 Wn.App. 928,538 P.2d 563
• Parties: GENERAL INSURANCE COMPANY OF AMERICA, Appellant, v. Gilbert W. GAUGER et al., Respondents.
• Court: Washington Court of Appeals

Page 928

13 Wn.App. 928

538 P.2d 563

GENERAL INSURANCE COMPANY OF AMERICA, Appellant, v. Gilbert W. GAUGER et al., Respondents.

No. 1282--III.

Court of Appeals of Washington, Division 3.

July 16, 1975.

C. E. Huppin, Morrison, Huppin, Ewing & Anderson, Spokane, for appellant.

Norman D. Brock, Underwood, Campbell, Zellmer & Brock, Davenport, for respondents.

GREEN, Judge.

This is a declaratory judgment action brought by General Insurance Company of America to determine coverage under a 'Growers and Ranchers Insurance Policy' issued to Gilbert and Ethel Gauger. General Insurance appeals from the entry of summary judgment in favor of Gaugers.

In the spring of 1973, Gaugers sold some seed barley to Odessa Union Warehouse, representing it to be Unitan spring barley. Odessa, in turn, sold the seed to various farmers. In fact, the barley seed was a mixture of spring and winter varieties and when planted did not properly head out or produce a normal crop, to the farmers' damage. Odessa settled and paid its customers' claims for damage and brought an action against Gaugers to recover the payment. Defense was tendered to General Insurance and this action followed.

The underlying question on appeal is whether the damage suffered by Odessa's customers constitutes 'property damage' as defined in the policy. The answer to this question depends upon an interpretation of the following provisions of the policy:

1. 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.

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DEFINITIONS

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'damages' includes damages for . . . loss of use of property resulting from property damage;

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'property damage' means injury to or destruction of Tangible property; . . .

(Italics ours.)

Incorporating the definitional language into the relevant portions of the liability coverage provision, it would read as follows:

1. LIABILITY COVERAGE

The company will pay all damages, (including) damages for loss of use of property resulting from injury to or destruction of tangible property, the insured is obligated to pay for liability imposed by law upon him because of injury to or destruction of tangible property to which this insurance applies, caused by an occurrence.

General's primary contention is that the trial court erred when it determined that the action against Gaugers involved 'property damage.' General argues that the damages paid by Odessa to its customers were for crop loss and, like loss of profit, does not constitute 'injury to or destruction of Tangible property.' (Italics ours.) We reject this contention and adopt the reasoning and holding in Safeco Ins. Co. v. Munroe, Mont., 527 P.2d 64 (1974). ¹

In Safeco, winter wheat was sold as spring wheat and the resulting actions against the seller of the wheat for damages became the subject of a declaratory judgment action to determine whether the claims were covered under an insurance policy identical to the one in this case. As here, Safeco contended that the claims were not injuries to 'tangible' property. In disposing of this contention, the Montana court in Safeco stated, at page 68:

We find this contention to be without merit. We find no error in and adopt the finding of fact No. 8 of the district court:

'8. That if the claimants against Munroe as aforedescribed suffered any loss by virtue of having received and planted the wrong type of seed wheat, it follows, as a matter of common knowledge, that the land in which the seed wheat was planted would have been damaged in that said land would have lost a portion of its retained moisture, would have lost a portion of its retained fertilizer, weeds would have grown thereon where no crop had grown, erosion would have occurred, said land would have to have been recultivated in order to render it suitable for the planting of another crop of the same or similar nature, and that if little or no crop grew, the claimants would have received little or no compensation by virtue of having lost a crop, and would have suffered loss of use of their lands' . . we find it to be beyond dispute that a Montana wheat field and the crop therein, is tangible property. The district court clearly found injury to the wheat fields and thus injury to tangible property.

Following this reasoning, we hold that the trial court correctly determined that the Odessa claim was based upon injury to 'tangible' property.

Having found injury to tangible property, General's contention that crop loss is not covered by the policy must fail. In this contention, General confuses the injury to tangible property with the nature of the damages flowing therefrom. Crop loss is merely a measure of the damage, albeit intangible, flowing from the injury to tangible property and not, itself, the injury. As the court in Safeco said at page 68:

The plaintiff (sic), clear, unambiguous meaning of the language in the policy is that once it has been found that tangible property has been damaged, there is insurance coverage for all damages because the term damages is used without limitation and, in fact, is expanded to include damages for loss of use. The issue then becomes whether or not Safeco's policy language is sufficiently strong enough to exclude insurance coverage for consequential damages--loss of profits. It might be that loss of profits is an item of intangible damage. However, it is of utmost importance to note that the policy does not, by any stretch of the imagination, require that there be tangible damage to tangible property. Clearly, it was not Safeco's intention to exclude consequential damages or they would have said so in the policy.

(Italics ours.) This conclusion is further supported by Labberton v. General Cas. Co. of America, 53 Wash.2d 180, 332 P.2d 250 (1958); and St. Paul Fire & Marine Ins. Co. v. Northern Grain Co., 365 F.2d 361 (8th Cir. 1966). Both of these...