On this appeal, we are called upon to determine whether a comprehensive general liability insurance policy affords coverage for a property damage claim in favor of Kansas City Insulation Company ("Kansas City"), appellant here and garnishing judgment creditor below. Jurisdiction is established by diversity of citizenship between the contending parties and an adequate amount in controversy. Prior to the proceedings below, Kansas City brought a civil action against T. F. Scholes of Arkansas, Inc. ("Scholes") in the United States District Court for the District of Colorado. During that litigation, Scholes, as an insured, requested defense of that suit from its comprehensive general insurer, American Mutual Liability Insurance Company ("insurer"), pursuant to the policy in question here. The insurer declined coverage on the basis that the claim was not within the designated policy risk. Thereafter, in early 1963, Kansas City obtained judgment by default against Scholes for the sum of $13,081.17 and now has brought a garnishment proceeding in aid of execution against the insurer. The court below determined that the insurer's policy did not cover Kansas City's claim. Kansas City appeals from that determination. We affirm.

The policy of insurance had been written and issued by the insurer to Scholes in Reading, Pennsylvania. The insurer and Kansas City agreed that Pennsylvania law would apply to the present controversy.

Scholes was a general contractor and had been engaged in the construction of an underground potable-water system for the United States Air Force Academy at Colorado Springs, Colorado. Scholes had commenced work on the project in July of 1957 and had completed the work during April of 1958. In the latter month, final acceptance inspections were made by Academy construction representatives and by April 14, 1958, Scholes had no men, equipment or offices in the State of Colorado and did no further work under the Air Force Academy contract.

After Scholes had finished in Colorado, it purchased from the insurer the comprehensive liability insurance policy described below. During the Colorado operations, Scholes had been insured under a similar policy, issued by the United States Fidelity and Guaranty Company, which terminated on April 25, 1958, the day after the commencement date of the policy here in question. On June 15, 1958, about two months after Scholes had completed construction, a water main on the Academy potable-water system ruptured. Subsequent investigation revealed that the break was due to an improper installation of a gate valve at an intersection of water pipes causing the valve to "blow off" under pressure. That incident caused water damage to insulating material stored by Kansas City in a nearby building. The alleged negligence of Scholes and the consequent damage to Kansas City's property formed the basis of the Colorado judgment in favor of Kansas City.

The insurance policy in question is complex. The insurer agreed with the named insured, Scholes,1 subject to the limitations of liability, exclusions, conditions and other terms of the policy, to protect the insured against claims for bodily injury and property damage, viz.:

   "
   _______________________________________
   Coverage B — PROPERTY DAMAGE
   LIABILITY
   TO PAY on behalf of the insured all
   sums which the insured shall become
   legally obligated to pay as damages
   because of injury to or destruction of
   property, including the loss of use
   thereof, caused by accident."
                                    "
   _________________________________________

The policy period extended for one year following April 24, 1958. The front page of the contract further recited:

"3. The insurance afforded is only with respect to such and so many of the following coverages as are indicated by specific premium charge or charges. The limit of the company's liability against each such coverage shall be as stated herein, subject to all the terms of this policy having reference thereto.

______________________________________________________________________________________________
      COVERAGES               |                 LIMITS OF LIABILITY             |    ADVANCE
                              |                                                 |   PREMIUMS
______________________________|_________________________________________________|_____________
                              |  $  200,000.             each person            |
A — Bodily Injury Liability   |  $  500,000.             each accident          |*
                              |  $ EXCLUDED SEE END. 1   aggregate products     |
______________________________|_________________________________________________|_____________
                              |  $  50,000.              each accident          |
                              |  $  100,000.             aggregate operations   |
B — Property Damage Liability |  $  100,000.             aggregate protective   |*
                              |  $ EXCLUDED SEE END. 1   aggregate products     |
                              |  $  100,000.             aggregate contractual  |
                              |                                                 |*   "
______________________________|_________________________________________________|_____________

The various hazards included and excluded in the policy are listed as follows:

                      "DESCRIPTION OF HAZARDS
_________________________________________________________________________________________
The rating classifications under the Description  |      |      |  Advance Premiums
of Hazards do not modify the exclusions           | ***  |  *** |  Coverage  Coverage
or other terms of this policy.                    |      |      |    A         B
__________________________________________________|______|______|________________________
(a) Premises-Operations                           |      |      |
SEE SCHEDULE ATTACHED                             |      |      |    423.70    448.16
__________________________________________________|______|______|________________________
(b) Elevators Type                                |      |      |
TO BE DETERMINED ON AUDIT                         |      |      |
__________________________________________________|______|______|________________________
(c) Independent Contractors                       |      |      |
TO BE DETERMINED ON AUDIT                         |      |      |
__________________________________________________|______|______|________________________
(d) Products (Including Completed                 |      |      |
    Operations)                                   |      |      |
EXCLUDED SEE END. 1 (F 1928)                      |      |      |
__________________________________________________|______|______|________________________
(e)Contracts as Defined in Condition 3            |      |      |     38.50    19.15"
SEE ENDS. 5, 6 AND 7                              |      |      |
__________________________________________________|______|______|________________________

Endorsement No. 1 attached to the policy recited:

"It is agreed that the policy does not apply to the products hazard as defined therein."

Thus, it seems from the enumeration of coverages and the applicable endorsements that the hazards for premises-operations, elevators, independent contractors and contracts were included in the coverage and a premium was charged or to be charged therefor, while the hazard under the title "Products (Including Completed Operations)" was excluded.

The excluded hazard, i. e. the product hazard, is specifically defined in the policy in the following pertinent language:

"(c) Products Hazard. The term `products hazard' means

(1) goods or products manufactured, sold, handled or distributed by the named insured or by others trading under his name, if the accident occurs after possession of such goods or products has been relinquished to others by the named insured or by others trading under his name and if such accident occurs away from premises owned, rented or controlled by the named insured * * *

(2) operations, if the accident occurs after such operations have been completed or abandoned and occurs away from premises owned, rented or controlled by the named insured; provided, operations shall not be deemed incomplete because improperly or defectively performed or because further operations may be required pursuant to an agreement; * * *"

This type of policy has been before the courts on many occasions and its structuring is noted in Ocean Accident & Guar. Corp. v. Aconomy Erectors, Inc., 224 F.2d 242 (7th Cir. 1955); Standard Accident Ins. Co. v. Roberts, 132 F.2d 794 (8th Cir. 1942).

Appellant Kansas City contends that its judgment is covered under the provisions of the American Mutual liability policy on the following analysis:

(1) Notwithstanding that the policy was not in effect at the time the work was performed by Scholes, the water damage nevertheless occurred during the policy period.

(2) The "premises-operations" hazard refers to a schedule attached to the policy. Such schedule lists "Code No. 3499: SEWER CONSTRUCTION-ALL OPERATIONS-". Appellant submits that the language of the schedule specifically covers all operations involved in sewer construction.3 The exclusion for the products hazard, including completed operations, is ambiguous, according to appellant's contention, and thus the insurer is not able to avoid liability under the judgment. Further, in order to give some effect to the products-hazard exclusion and to construe the alleged ambiguity against the insurer, Kansas City contends that the exclusion relates to products manufactured, sold, handled or distributed by the insured, but not to contracting work such as that completed by Scholes.

We do agree with appellant's contention that, if the policy is otherwise applicable, the loss occurred within the policy period. By an endorsement, the policy definition of an accident is

"deemed to include continuous or repeated exposure to conditions which result in injury during the policy period, provided such injury is accidentally caused. All damage arising out of such exposure to substantially the same general conditions shall be considered as arising out of one accident."

The actual damage to Kansas City's property occurred subsequent to April 24, 1958, and within the insurer's policy period. In policies of this type, the date of the accident or loss and not the date of the negligent act controls. Utilities Construction Corp. v. Peerless Ins. Co., 233 F. Supp. 64 (D.Vt.1964); Nielson v. Travelers Indemnity Co., 174 F. Supp. 648 (N.D.Iowa 1959), aff'd, 277 F.2d 455 (8th Cir. 1960); Peerless Ins. Co. v. Clough, 105 N.H. 76, 193 A.2d 444 (1963). Cf. Zingale v. American Surety Co. of New York, 105 Ohio App. 16, 146 N.E.2d 317 (1957).

In analyzing the coverage of similar policies, courts have found the coverage to be ambiguous, complex or incomprehensible.4

There has been considerable difficulty in drawing the line between an insured's operations which are covered under the "Premises-Operations" hazard and those completed operations which may not be covered where, as in the present case, the "Products (Including Completed Operations)" hazard has been excluded. The problem is particularly troublesome in cases involving contractors, as distinguished from suppliers of a product, as demonstrated in Nielson, supra, in which Judge Graven's opinion noted:

"The products hazard provision does not usually give rise to unusual difficulty as to liability insurance coverage where there is only involved the manufacture or sale of what is commonly known and regarded as a product. Where the transaction involves a contract between an independent contractor and an owner for the erection of a structure and the contractor furnishes material for the structure, greater difficulty is encountered as to liability insurance coverage under the products hazard provision. However, when the contract involves a contract between an independent contractor and an owner for the rendering of services which do not involve the furnishing or supplying of any product or material, the question of liability insurance coverage under the products hazard provision becomes most difficult." 174 F. Supp. at 653-654.

A substantial number of courts, both state and federal have limited the completed-operations exclusion clause to apply only to those claims arising from products manufactured, sold, handled or distributed by the named insured.5

However, with other circumstances, other cases hold that the exclusion for products hazard (including completed operations) contains unambiguous language and the insurer is not responsible for losses due to accident occurring after the insured has completed contracting work.6

This circuit has dealt with the problem in several diversity cases, but none specifically applying Pennsylvania law.7 In this case, we are charged under Erie with deciding the legal issues in accordance with applicable Pennsylvania law.

The Pennsylvania cases furnish a guidelight but no clear beacon. In Clauss v. American Automobile & Ins. Co., 175 F. Supp. 641 (E.D.Pa.1959), the issue under Pennsylvania law was whether a sewer contractor's liability policy, similar to that here contested, applied to an accident occurring three months after the contractor had completed his work which included excavation and repair of streets. A motorist had been injured when his automobile went out of control on a city street, allegedly due to a condition resulting from the contractor's negligent excavation and repair work. Upon the contractor's seeking protection from his insurer, the court held that the products-hazard exclusion was not ambiguous and the accident occurring after completion of the work was not covered. Relying on Clauss, the appellee in the present case asserts that his judgment in the district court below ought to be affirmed.8

Plaintiff-appellant Kansas City claims that the Pennsylvania law is to the contrary, relying on Gehrlein Tire Co. v. American Employers Ins. Co., 243 F. Supp. 577 (W.D.Pa.1964), aff'd per curiam, 348 F.2d 918 (3rd Cir. 1965). In that case, the Gehrlein Tire Company reassembled a truck tire and rim and redelivered the unit to an owner-customer. Subsequently, the customer, in installing the tire unit on his truck, was injured when the repaired tirerim assembly exploded. The injured customer recovered a judgment against Gehrlein for negligently not warning of the defective condition of the wheel rim and Gehrlein sought to have his insurer satisfy the judgment under a liability policy similar to that in the instant case. The court held that the policy covered the accident and determined that the completed-operations portion of the products-hazard exclusion was not applicable because the negligence of Gehrlein was based on its failure to warn of a defect and that failure to warn was a continuing duty.9 Appellee would distinguish Gehrlein since the case involved services only while Scholes provided both services and materials. Such distinction is tenuous.

Both parties gain solace from Eastcoast Equipment Co. v. Maryland Cas. Co., 207 Pa.Super. 383, 218 A.2d 91 (1966); appellee because a similar comprehensive policy with a products-hazard exclusion was held to be not ambiguous; appellant because the court construed the policy to afford coverage for the particular loss. Eastcoast dealt with a machinery dealer's alleged misrepresentations in the sale of a large crane, the boom of which later fell and caused injuries to third parties. The insured, having been absolved of liability, sought recovery of the cost of defending the lawsuits arising from the incident from the insurer who had refused to participate in the earlier litigation. The case was decided on the basis of "construction" of the policy. The court held that the machinery dealer's representations were of a continuing nature and, thus, an "uncompleted operation". The court did not resort to the ambiguity rationale in its decision.10

While Pennsylvania cases afford no clear-cut guidelines and cases elsewhere support either the position of the appellant or that of the appellee, we need not pick and choose among the competing rationale of conflicting cases nor attempt to reconcile diverse holdings.

An examination of the typewritten schedules of the policy convinces us that there is no ambiguity as to the accident that occurred at the Air Force Academy following the insured's completion of its work.

The hazards are listed in the policy as follows:

                   "SCHEDULE
Code No.
3444:  Railroad construction — N.O.C. —
       all operations — including laying,
       relaying or removal of tracks or
       maintenance of way by contractors.
       Bridge building other than
       temporary bridges or trestles,

       tunneling construction or work
       on elevated railroads, logging
       railroads or street railways to be
       separately rated.

3449:  Sewer construction — all operations
       — including tunneling at
       street crossings. All other tunneling
       to be separately rated.

3450:  Street or road construction
       or reconstruction — clearing of
       right-of-way, excavation, filling
       or grading, bridge or culvert
       building. Tunneling and bridge
       or culvert building where clearance
       is more than 10 feet at any
       point or the entire distance between
       terminal abutments exceeds
       20 feet, to be separately rated.

3484:  Salesmen, collectors or messengers
       — outside.

3485:  Clerical office employees — N.O.C.

5200:  Concrete or cement sidewalk,
       driveway, yard, airport runway
       or warming apron construction.

5213:  Concrete construction — N.O.C. —
       including foundations, making,
       setting up or taking down forms,
       scaffolds, falsework or concrete
       distributing apparatus. Excavation,
       pile driving and all work
       in sewers, tunnels, subways, caissons
       or coffer dams to be separately
       rated.

5506:  Street or road paving or repaving,
       surfacing or resurfacing or
       scraping, clearing of right-of-way,
       earth or rock excavation,
       filling or grading, tunneling,
       bridge or culvert building, quarrying,
       or stone crushing to be
       separately rated."

Following pages of the policy list the hazards that are applicable in some thirty-five states. For example, in Arkansas the hazards listed are Code Nos. 3444 (referring to railroad construction, etc.); 3449 (sewer construction, etc.); 3450 (street and road construction, etc.); 3485 (clerical); 5200 (concrete, etc. construction); 5213 (other concrete construction); and 5506 (street, etc. paving), and omitting Code No. 3484 (salesmen, etc.). The scheduling for other states lists one or more hazards. The listing for Colorado is specific and the only hazard scheduled is Code No. 3485: "Clerical Office Employees-N.O.C.".

Scholes purchased the instant policy after he had withdrawn his men and equipment from the Academy project and had left Colorado. The policy schedules demonstrate that the risk of construction operations, of any kind — completed or uncompleted, were not intended to be covered in Colorado during the policy period. The failure to schedule a construction-operations hazard for Colorado, while such coverage was scheduled for other states, removes any possible obfuscation in the interrelation of the operations-coverage clause and the completed-operations exclusion. A Nielson-type ambiguity is not present here. This conclusion is independently supported by the affidavit, stipulated as evidence, of Franklyn L. Hornberger, former president of T. F. Scholes of Arkansas, Inc., who had personal knowledge of the Colorado project. Mr. Hornberger's affidavit testimony, reproduced below,12 indicates that the insured was not misled as to coverage and did not purchase coverage for the "Products Hazard" relating to the completed Air Force Academy work. While the claimant is entitled to a construction of the policy resolving an ambiguity in its favor,13 nevertheless such affidavit testimony demonstrated that there was no misunderstanding between insurer and the insured.

Considering extrinsic circumstances and viewing the policy as a whole, we find no ambiguity in the application of the policy to Kansas City's claim. See, Float-Away Door Co. v. Continental Cas. Co., 372 F.2d 701 (5th Cir. 1966), cert. denied, 389 U.S. 823, 88 S. Ct. 58, 19 L. Ed. 2d 76 (1967); Hodgins v. American Mutual Liability Ins. Co., 261 F. Supp. 129 (E.D.Pa.1966); Gruber Personnel Services, Inc. v. Indemnity Ins. Co. of North America, 212 Pa.Super. 120, 239 A.2d 880 (1968); Miller v. Lindgate Developers, Inc., 274 F. Supp. 980 (E.D. Mo.1967). Cf. Snader v. London & Lancashire Indemnity Co. of America, 360 Pa. 548, 62 A.2d 835 (1949).14 Kansas City's loss is not covered under the policy.

The judgment is affirmed.