highway, to lay gas-pipes for the purpose of carrying gas for heat and power, to erect poles or wires for transmitting electric heat and power along or upon any public street or highway, or to exercise any other privilege whatever hereafter proposed to be granted by boards of supervisors, boards of trustees, or common councils, or other governing or legislative bodies of any city and county, city or town within this state, except steam railroads and except telegraph or telephone lines doing an interstate business, and renewals of franchises for piers, chutes or wharves, shall be granted upon the conditions in this act provided, and not otherwise.' It is to be seen that no mention is made therein of any franchise for laying water-pipes or laying or erecting pipes or structures for furnishing light. This, no doubt, was in consequence of the decision in the Pereria case, supra.

"Said act provides also for public advertising of the application, and in section 3 thereof is this language: "The publication must state the character of the franchise or privilege proposed to be granted, . . . and if it be a street railroad, the routes to be traversed; that sealed bids therefor will be received up to a certain hour and day named therein, and that the successful bidder and his assigns must, during the life of said franchise, pay to the municipality two per cent (2%) of the gross annual receipts of the person, partnership or corporation to whom the franchise is awarded, arising from its use, operation or possession. No percentage shall be paid for the first five (5) years succeeding the date of the franchise, but thereafter such percentage shall be paid annually.

'Section 5 of said act provides: 'Said advertisement shall also contain a statement that the said franchise will be granted to the person, firm or corporation who shall make the highest cash bid therefor; provided only, that at the time of the opening of said bids any responsible firm or corporation present, or represented, may bid for said franchise or privilege a sum not less than ten per cent above the highest sealed bid therefor, and said bid so made, may be raised ten per cent by any other responsible bidder present, and said franchise or privilege shall finally be struck off, sold and granted by said governing body to the highest bidder therefor, in gold coin of the United States, and said successful bidder shall be required to deposit with said governing body, or such person as it may direct, the full amount of his or its said bid, within

twenty-four hours thereafter; and in case he or it shall fail so to do, then the said franchise or privilege shall be granted to the next highest bidder therefor.'

"From the foregoing, it is quite apparent that the consideration for the sale, as far as it is to be determined by the action of the governing body of the municipality, is to be for a stated amount to be paid in cash immediately. In other words, in case there be competitive bids, the municipal authorities have no discretion as to whom they shall sell the franchise, or upon what basis. They must sell-if they sell at all-for cash and to the highest bidder. (Thompson v.

Alameda County, 111 Cal. 553, [44 Pac. 230].) If there be no competitive bids, however, or no cash offer, they may grant to any applicant the franchise upon such reasonable regulations as they may prescribe, and upon the condition provided by the statute that the applicant pay to the municipality a certain percentage of the gross proceeds arising from the business of operating the franchise. The municipality has no control over this percentage. It is not the subject of contract, but is fixed at two per cent by the law. It is to be taken from the gross proceeds of the use and exercise of the franchise which is granted by said municipality. This means, of course, from the proceeds of the franchise which is legally granted by the authorities. No percentage can be charged against a franchise which already belongs to the applicant.

"It is quite plain, though, that by said ordinance the city board of trustees attempted to impose this percentage charge upon the applicant for the privilege of supplying electric light as well as the electric power. But the charge for the power was in excess of the allowance provided by the law, and is, therefore, void to that extent.

"The fact is the sale of the franchise was not made for cash at all. The record does not even show that any bid was received for the same. Prior was and had been for years operating the plant, and there was probably no disposition to exact of him anything more than the percentage provided by the statute.

"To recapitulate: The board of trustees attempted to grant two franchises. One of these, however, already belonged to the grantee by virtue of the provision of the constitution, and, therefore, as to it said ordinance was inoperative. The franchise which was the subject of bargaining between Prior

and the municipality was not sold for cash, but was transferred in consideration of the percentage provided by law. It is unimportant that said percentage was recited in the ordinance, as this added nothing to what is fixed by the statute. The case is exactly as though two separate ordinances had been passed, in one of which a franchise was granted to furnish electric light, and in the other, to supply electric power, and in each it was provided that the grantee should pay two per cent of the gross proceeds to the city. Under the authorities, as we have seen, the attempted charge for the first would fail and only the second could be collected.

"As we have already intimated, Prior and the trustees no doubt believed that the town had the legal right to grant or withhold the lighting franchise. The parties, in other words, were acting under a mutual mistake as to their legal rights in the premises, and this accounts for the charge attempted to be imposed upon the exercise and operation of the electric light franchise. The mistake, though, would not prevent appellant from taking advantage of its legal rights when they were disclosed unless the doctrine of estoppel could be successfully invoked. But we can see no room for the application of such principle. Respondent cites, in this connection, such cases as Mayor etc. of Borough of Rutherford v. Hudson River Traction Co., 73 N. J. L. 227, [63 Atl. 84], wherein a street railroad franchise provided that the railroad company do certain macadamizing, and it was contended that the provision was ultra vires and void. Therein it was said: 'But in our view it is not open to the traction company to raise the question that the grant of its local privileges and franchises was ultra vires the municipal corporation, while at the same time the company retains and enjoys these privileges and franchises. The plea of ultra vires is not admitted in such circumstances except where it is practicable to restore the status quo ante, and we therefore think the present respondent is estopped from setting up that plea.' But herein the only privilege secured by Prior through the action of the board of trustees was to operate the plant for the purpose of furnishing electric power, and appellant does not claim that therein was the act ultra vires. If such claim were made, it is probable that it could not be maintained by virtue of the principle of estoppel. The doctrine, however, does not preclude the assertion of a right and privilege obtained from an entirely different source,

nor does it affect contracts entered into beyond the range of municipal authority. In City of Arcata v. Green, 156 Cal. 759, [106 Pac. 86], it was said: 'A party contracting with a city regarding a subject matter within the scope of the city's powers may, where he has received the benefit of the contract, be precluded from asserting that the contract was not, on the part of the city, executed in the manner required by law. The doctrine, however, cannot be made to cover contracts entirely beyond the range of the municipal authority.' (See, also, Foxen v. City of Santa Barbara, 166 Cal. 77, [134 Pac. 1142], Town of St. Helena v. Ewer, supra.)

"We can see no merit in the last two contentions of respondent, and as to the first, the law has been construed in this state in favor of appellant's claim.

"The judgment should be reduced to $57.98, and, as thus modified, it is affirmed, appellant to recover its costs."

A petition to have the cause heard in the supreme court, after judgment in the district court of appeal, was denied by the supreme court on January 21, 1918.

Angellotti, C. J., dissented from the order denying a hearing in the supreme court.

[Civ. No. 1918. Second Appellate District.—November 22, 1917.] KNJAZ HEBOJOFF, Respondent, v. GLOBE INDEMNITY COMPANY OF NEW YORK (a Corporation), Appellant.

INDEMNITY INSURANCE-LOSS SUSTAINED BY ASSURED LIABILITY OF INSURER-PAYMENT IN MONEY.-Where a policy of insurance against loss by reason of accident to employees provides that no action shall lie against the insurance company except for reimbursement for the amount of loss actually sustained and "paid in money" by the assured in full satisfaction of a judgment duly recovered against him, the giving of his promissory note in satisfaction of the judgment is not a "payment in money" within the terms of the policy, and is therefore insufficient to sustain an action on the policy.

APPEAL from a judgment of the Superior Court of Los Angeles County. Frederick W. Houser, Judge.

The facts are stated in the opinion of the court.

J. Karl Lobdell, and Gurney E. Newlin, for Appellant.
I. Henry Harris, and Charles A. Bank, for Respondent.

JAMES, J.-The appeal in this case is taken from a judgment entered in favor of the plaintiff. The plaintiff here first recovered judgment against a corporation named Pendleton Iron & Metal Company, which judgment was for damages for personal injuries suffered by the plaintiff while in the employ of said corporation. At the time the injuries were suffered a policy of insurance had been issued by this defendant, insuring the Pendleton Company against loss by reason of accident to its employee. After judgment had been entered against the Pendleton Company in favor of plaintiff here, the Pendleton Company issued its promissory note to the plaintiff and thereupon caused the judgment to be satisfied of record, and thereafter an assignment was made by the Pendleton Company of all right of action which it had as against the appellant here under the contract of insurance. This action was then brought on account of such assigned claim.

The principal point argued in the briefs refers to that term of the policy of insurance which reads as follows: "No action. for the indemnity against loss provided for in insuring agreement I of this policy shall lie against the company, except for reimbursement of the amount of loss actually sustained and paid in money by the assured in full satisfaction of a judgment duly recovered against the assured after trial of the issue, nor unless brought within two years after such judgment shall have been paid. . . . " Preliminarily it may be stated that the insuring agreement "I" referred to in the above quotation covered all principal loss which might be suffered by the assured. Appellant urges this court to decide that under the agreement providing that loss must be paid in money before an action can be maintained: 1. Payment by a promissory note is no payment at all; 2. That if the giving of a promissory note in satisfaction of the judgment debt against the assured constitutes payment in the ordinary case, such conclusion could not be applied here where the contract expressly provides that the loss must be paid "in