apple 'there ain't going to be no core.' There is no obligation on the companies to have anything left. They conduct the business as they see fit-they take their share of the partnership first-and the devil take the hindmost. A more flagrant violation of the constitutional provision can hardly be imagined. That such things could be demonstrates the necessity and reason for the rule."

It would seem that the determination as to whether or not the so-called operating agreement is in effect a sale of electrical energy at wholesale to the contracting companies, or is a method of distributing the power of the city to its consumers, would turn in part upon the question as to whether or not the return to the city would be regulated solely with reference to the quantity of power furnished by the city. If the contract was so arranged that the city would at all times receive a definite amount for the power furnished, regardless of the hazards of the business or the expense of distribution, then it might be argued with some force that it was a sale within the meaning of the charter prohibiting such a transaction. On the other hand, as the arrangement is such that the city merely pays for the use of a distributing system an amount fixed by the contract and receives all the money paid by the retail consumers except amounts so paid to the contracting companies for the use of their system, it would seem clear that the transaction is not a sale of power by the city to the companies. Furthermore, as the contract is so adjusted that an increase of rates paid by the consumers would not inure to the benefit of the distributing companies, but to the benefit of the city, it would seem clear that there had not been a sale or transfer of electrical energy to the companies as contemplated by the charter. Under the contract in question, if the rates to the retail consumer are doubled the city would reap the entire benefit of the increase. Whereas, if the city distributes at a fixed wholesale rate and the retail price is increased, the benefit of such increase would go to the retailer and not to the wholesaler. The contract seems to be a reasonable arrangement, honestly made, to bridge over a necessary period during which the city is seeking to acquire these distributing systems, so as to comply with the charter in its sale of power, and it

is not so framed as to violate either the letter or the spirit of the charter.

It is contended by the appellant that if the contract in question be construed as a lease that it is invalid and in violation of section 51a of the Public Utilities Act [Stats. 1915, p. 149], without the consent of the Railroad Commission. As we understand the record, such consent has been obtained, and the appellant does not press the point. As already stated, appellant contends that the contract violates section 31 of article IV of the constitution, prohibiting the legislature from giving or lending, or authorizing "the giving or lending of the credit of the state, or of any county, city and county, city, township, or other political corporation or subdivision of the state now existing, or that may be hereafter established, in aid of or to any person, association or corporation, whether municipal or otherwise, or to pledge the credit thereof in any manner whatever, for the payment of the liabilities of any individual, association, municipal or other corporation whatever; nor shall it have power to make any gift, or authorize the making of any gift, of any public money or thing of value to any individual, municipal or other corporation whatever. . .

[4] This provision of the constitution is in the article regulating the powers of the legislative department of the state government and is a limitation upon the power of the state legislature. The powers of the city of Los Angeles are not derived from the legislature, but from a freeholders' charter directly provided for by the constitution. That is to say, the people of the state through the constitution authorize the people of the city to regulate its affairs by a charter to be framed by a board of freeholders and voted upon by the people of the city and approved by a resolution of the legislature. Section 31 of article IV has no application to a city charter. It is expressly provided by the constitution, article XI, section 6, that the city in its charter may make and enforce all laws and regulations in respect to municipal affairs, subject only to the restrictions and limitations provided in their several charters, and in respect to other matters they shall be subject to and controlled by general laws. [5] The sale and distribution of electrical energy manufactured by a city

is a municipal affair and one over which the legislature of the state has no control.

[6] It may be said, also, that the contract complained of by the appellant does not purport to give away the power of the city and does not in fact do so, and that if there is no adequate return to the city from its power so distributed it will be because of insufficiency of the retail price to cover the expenses of generating and distributing the power and not because anything has been given to the contracting corporations. [7] The argument of the appellant, however, is based upon the contention that the contract establishes a business partnership and that such a partnership is per se a violation of article IV, section 31, of the constitution. In this behalf they cite the case of Walker v. Cincinnati, 21 Ohio St. 14 [8 Am. Rep. 24], quoting the following therefrom: "The mischief which this section interdicts is a business partnership between a municipality or subdivision of the state, and individuals or private corporations or associations. It forbids the union of public and private capital or credit in any enterprise whatever." To the same effect they cite the case of Hunter v. City of Roseburg, 80 Or. 588 [156 Pac. 267, 157 Pac. 1065]. (See, also, Alter v. Cincinnati, 56 Ohio St. 47 [35 L. R. A. 737, 46 N. E. 69].) A situation more nearly parallel to that involved in this case is that of Admiral Realty Co. v. City of New York, 206 N. Y. 110 [Ann. Cas. 1914A, 1054, 99 N. E. 241], involving a contract between the city of New York and the Interborough Rapid Transit Company and another with the Brooklyn Union Elevated Railroad Company. It was held that the contracts in that case did not violate a constitutional provision similar to our article IV, section 31, the arrangement there being for the use of certain subways belonging to the city, the construction of additional subways and elevated railroads and the operation thereof jointly with the old lines as a single system, and providing for payment to the respective parties in accordance with their respective interests. The contract was sustained. Because of our view as to inapplicability of the constitutional provision relied upon (art. IV, sec. 31), we do not pursue this matter further, although it is clear that such an arrangement as is here made could hardly be classed as a partnership,

and the mingling of capital is merely incidental to the purchase and sale of a distributing system which the city is clearly authorized to purchase.

It is urged by the city that the city power distributed by these systems is "surplus power" and therefore the consent of the voters is not required by the charter. [8] A fair construction of the charter would seem to require that where the power is to be sold at wholesale to be distributed to the citizens of Los Angeles, the consent of twothirds of the voters must be secured, whether or not the power is surplus. The evident purpose of the proviso was to permit the sale of power to outside municipalities and consumers of energy when such power was not needed within the city itself and was therefore "surplus power."

[9] It is contended that if the contract in question is in substance and effect an agreement to purchase 25,000 horse-power of electricity from the companies, it is violative of section 207a of the charter, requiring a letting to the lowest responsible bidder after advertisement, where contracts involve an expenditure of more than $500 by the city. We think it clear that the arrangement entered into with the companies, however it may be characterized, is not a contract required to be let only after advertisement and to the lowest bidder. The power to be supplied by the companies could not be obtained elsewhere and is furnished by public service corporations for distribution to customers already entitled to that service. The case of Contra Costa Water Co. v. Breed, 139 Cal. 432 [73 Pac. 189], seems to support this view under somewhat similar charter provisions of the Oakland charter. (See, also, on this general subject, section 802 of Dillon on Municipal Corporations, 5th ed.) The time fixed for the termination of the contract (July 1, 1919) has already passed, but, by reason of the fact, admitted by counsel that it has been extended from time to time and is still in force, we have not considered the issuance of an injunction a moot question.

A rehearing was ordered to correct an erroneous statement as to the execution of the contract of purchase as distinguished from the operating contract to which the proposed form of the contract of purchase was attached, and to consider the effect of such error. We are satisfied

with our former conclusion and, with some minor changes, have adopted the former opinion.

Judgment affirmed.

Lawlor, J., Shurtleff, J., and Sloane, J., concurred.

SHAW, C. J., Concurring.-The agreement which is the subject of this controversy, when stripped of matters of detail and description, is nothing more than an arrangement between the city of Los Angeles and the two public service corporations named therein whereby, pending the final consummation of a proposed sale to the city of their electric distributing plants, the two corporations undertook to distribute to consumers in the city of Los Angeles, by means of their existing systems of distribution, the electricity generated by the city in its own power plant and a sufficient amount of additional electricity from their own plants to supply the wants of such consumers, which additional electricity was thereby to be considered as sold by said corporations to the city for that purpose, and to collect for the city the money due from such consumers for the electricity so distributed to them. The city on its part agreed that the two corporations, as compensation for such services to the city, should retain a certain fixed percentage of the money collected from consumers and should pay over to the city the balance thereof.

I cannot see that by such agreement the city has "sold, transferred, leased or disposed of" any electric power "to any person or corporation for resale, rental, disposal or distribution to consumers, ," within the meaning of subdivision 41, section 2, of the city charter. (Stats. 1911, p. 2066.) To the contrary, it seems clearly to provide for a purchase of electric power by the city from said corporations of enough additional electric power to supply its consumers, and for the distribution and sale of the city's electric power, including the power so purchased, by and through the two corporations as its agents for that purpose. This does not contravene the provisions of the charter aforesaid.

I concur in the conclusion that the judgment of the court below be affirmed.