officers, and the damages due to an individual who had suffered therefrom might be great, but such liability for a municipal wrong the constitution never meant to protect against. When it is come to consider the contractual relations between the city and appellant, it is at once seen that the city cannot be liable in any one year for more than four thousand nine hundred dollars, an amount far within the revenue derived to the sewer fund; and, further, that it cannot become liable for this amount at all until faithful service rendered by the contractor each year. If the city in any one year should fail to collect into its sewer fund moneys sufficient to pay the just claims of the contractor, then, as above said, it would be the contractor's loss, the city would be chargeable with no financial responsibility therefor, and the result at the most, so far as it was concerned, would be a failure upon the part of its officers to observe good faith in their dealings.

There need be here no struggles with the niceties of definitions to be given to debt or liability. An able discussion of those questions will be found in the case of Valparaiso v. Gardiner, supra. We base our views upon the conviction that, at the time of entering into the contract, no debt or liability is created for the aggregate amount of the installments to be paid under the contract, but that the sole debt or liability created is that which arises from year to year in separate amounts as the work is performed.

These views find abundant support in the adjudicated cases in this state. Article VIII of the former constitution of California provided that the legislature shall not create any debts or liabilities in any manner which shall exceed the sum of three hundred thousand dollars, except under certain specified contingencies. The state made a contract for the care of its prison, for convict labor, etc., for the period of five years, agreeing to pay therefor the sum of ten thousand dollars per month. The act came before this court for review in State v. McCauley, 15 Cal. 429, where the question was elabo

rately argued, and fully considered by the court. Chief Justice Field, in delivering the opinion of the court, spoke as follows: "The unconstitutionality of the act is asserted on two grounds: 1. That it appropriated the sum of six hundred thousand dollars, and thus created a debt or liability against the people of the state exceeding the limit prescribed by the eighth article of the constitution. . . . . The contract provides for the payment of ten thousand dollars a month, and the act appropriates this sum per month. The appropriations are to take effect, and the services are to be rendered, in future. Until the services are rendered there can be no debt on the part of the state. The lessee could not have claimed, at any time after the making of the contract, the aggregate of all the monthly installments, because the state never owed him that amount. The state only became indebted as the services were each month performed.

The eighth article was intended to prevent the state from running into debt, and to keep her expenditures, except in certain cases, within her revenues. These revenues may be appropriated in anticipation of their receipt as effectually as when actually in the treasury. The appropriation of the moneys when received meets the services as they are rendered, thus discharging the liabilities as they arise, or rather anticipating and preventing their existence. The appropriation accompanying the services operates, in fact, in the nature of a cash payment." This interpretation, after further consideration and argument, was reaffirmed in McCauley v. Brooks, 16 Cal. 1, and again in Koppikus v. State Capitol Commrs., 16 Cal. 248. In People v. Arguello, 37 Cal. 524, it is said: "A sum payable upon a contingency is not a debt, or does not became a debt until the contingency has happened."

These decisions being before the framers of the present constitution, under familiar rules of interpretation it will be held that their enactment of similar provisions was made in the light of them.

Wallace v. Mayor of San Jose, 29 Cal. 181, is not in

conflict with these decisions. The contract there contemplated a payment which might become a debt in the year in which the contract was executed, as well as in some future year. Under the peculiar language of the charter, which forbade the creation of any debt unless the money was actually in the treasury to meet it, it was declared that the council had no authority to provide for the creation of a debt to arise in the future, any more than to create one directly and in praesenti.

Upon the second proposition, namely, whether or not the contract operates as a surrender or suspension of the legislative powers of the trustees of the city, it is to be observed that there is in this state no inhibition against the making of a contract by a municipal board which shall extend for more than one year, or even beyond the term of office of the board which makes it. If the legislature desired to restrict municipalities in this particular, it could easily do so by the passage of a law such as exists in some other states declaring void any contract upon the part of a municipality which is to extend beyond the current fiscal year, or beyond the term of office of the authorities which enter into it. But, even in the absence of such provisions, courts look with disfavor upon contracts by municipalities involving the payment of moneys which extend over a long period of time; 1. Because such contracts in their nature tend to create a monopoly in favor of the other party thereto for supplying the city with the article contracted for; 2. Because they may involve an undue restraint upon the legislative powers of the successors of the board, and prevent those successors from availing themselves of a change in the times, of opposition, of reduced rates, or of other causes operating legitimately to decrease the price of the commodity, of which decrease in price the city by reason of its contract cannot avail itself.

There is thus by law and reason a well-defined limit set to such contracts. In the absence of any other objection to them, they will not be upheld without a clear showing of a reasonable necessity for their execution.

But if, on the other hand, it be made to appear that at the time of its execution the contract was fair and just and reasonable, and prompted by the necessities of the situation, or was in its nature advantageous to the municipality at the time it was entered into, then such a contract will not be construed as an unreasonable restraint upon the powers of succeeding boards.

In San Francisco Gaslight Co. v. Dunn, 62 Cal. 585, this court says: "In the absence of express limitation as to the period of time for which a contract may be made, we would hold, perhaps, that the contract with the plaintiff for five years was not beyond the power of the supervisors." In Riehl v. San Jose, 101 Cal. 442, an action was brought to set aside a contract for five years, made by the city with an electric company for the lighting of its streets. The complaint sounded in fraud, and further declared that the contract was against public policy, illegal and void. The contract was upheld, it being found that there was no fraud, and "that the members of the common council acted as honest men, and exercised their honest discretion for the best interests of the city."

We have here, then, a contract made for a purpose expressly authorized by the charter, a contract which looked to supply the city with an absolute need, a contract which pertained to the ordinary expenses of the city, and, together with other like expenses, was well within the limit of the current revenues authorized by its charter annually to be provided for this specific purpose. The term of the contract was fair indeed, in view of the considerable expense which the evidence showed plaintiff was obliged to undergo to fulfill his undertaking. Under these circumstances we hold the contract to be valid, operative, and binding upon the city.

The judgment and order are reversed and the cause remanded, with directions to the trial court to overrule defendant's demurrer.

MCFARLAND, J., and GAROUTTE, J., concurred.

[Sac. No. 1. Department Two.-March 26, 1896.] JOHN EICH, RESPONDENT, v. JUSTUS GREELEY ET AL., APPELLANTS.

AFTER

NEGOTIABLE PAPER-ACTION UPON PROMISSORY NOTE-INDORSEMENT MATURITY-Defense-OFFSET-COUNTERCLAIM-PAYMENTPLEADING DEMURRER.-In an action upon a promissory note, where the answer pleaded that the note was indorsed to the plaintiff after maturity, and denied consideration of the note, to the extent of one thousand dollars, and averred that before indorsement of the note, the payee was indebted to the defendant in the sum of one thousand dollars, for money paid, laid out, and expended, and for work and labor done by them for said payee, at his request, in that sum, while he was the holder of the note, which sum was and is an offset and payment on account of the note and that the same had not been paid, though demanded; and, further, that one thousand dollars was paid on account of the note before transfer to the plaintiff, who had notice thereof, and that plaintiff was the son of the payee, and that the transfer to him was without consideration, for the purpose of defrauding the defendants, although that portion of the answer constituting a counterclaim is fatally defective, ambiguous, unintelligible, and uncertain, by improperly uniting and mingling distinct causes of action in one count, yet, as the plea of payment, notice to plaintiff, and transfer of the note without consideration, as made in the answer, constituted, pro tanto, a valid defense to the action, a demurrer to the entire answer was improperly sustained.

ID. STRIKING OUT IMMATERIAL AND IRRELEVANT PART OF ANSWERFRAUDULENT TRANSFER OF PROPERTY.-The answer having admitted the making of the note, and shown on its face that there was an amount due thereon sufficient to cover the cross-demands of the defendants, it was immaterial to them or to their case whether or not plaintiff and the payee of the note had procured a fraudulent transfer of all or any part of the property of the payee; and the portion of the answer averring such fraudulent transfer was irrelevant matter, having no proper place in the pleading, and was properly stricken out under section 453 of the Code of Civil Procedure.

APPEAL from a judgment of the Superior Court of Yuba County. E. A. DAVIS, Judge.

The facts are stated in the opinion.

William G. Murphy, for Appellants.

McDaniel & Folsom, for Respondent.

SEARLS, C.-This is an action by the plaintiff as indorsee of a negotiable promissory note, made by defend