The instructor pilot said that during climb to cruise the engine suddenly quit completely with a loud noise. The instructor landed the aircraft in a field and the aircraft nosed over after colliding with a berm. Examination of the aircraft revealed that the rear dome of the left muffler had blown out. Scorching and exhaust stains were evident on the firewall to the rear of the muffler and wire bundles routed in this area were found burned with melted insulation noted. The 'P' leads for the magnetos were found routed in this wire bundle. Visual examination and electrical continuity checks of the 'P' leads revealed that the internal insulation had melted allowing the conductors to short within the wires. Examination of the muffler revealed severe internal erosion, with holes through the cabin heat shroud. The failed end of the muffler was found to be severely eroded around the failure point on the end piece, with small holes and external discoloration noted.