TOBRINER, J.
Plaintiffs, members of the Police and Fire Departments of the City of Eureka suing on behalf of themselves individually and as representatives of the other members of the two departments, sought a declaratory judgment that the pension payments directed to be made by Ordinance No. 2262, as amended, constitute a general obligation of the defendant, City of Eureka. The trial court found for plaintiffs. The City of Eureka appeals, contending that the pension payments are to be made solely from funds assigned to the retirement fund.
The complaint alleged "That an actual controversy has arisen between the parties in relation to the interpretation of said ordinance in that the parties are in dispute as to whether, under said ordinance and amendments thereto, the said ordinance creates a general tax liability of the City of Eureka from which benefits to plaintiffs and those similarly situated are to be paid, or whether said fund created by said ordinance is to be financed solely by contributions from the members of each Department [and matching contributions by the City as] mentioned therein."
Plaintiffs contend that any deficit in the retirement fund must be met by the City. The City argues that under express limitations of the State Pension Act (now Gov. Code, §§ 45300-45317) and of the city ordinance itself, it can be required to do no more than match the contributions of the members of the pension plan. In support of its contention, the City points to the parties' stipulation that the ordinance was adopted "under and in pursuance of the authority of Chapter 321 of the Statutes of 1937, as amended by Chapter 1080 of Statutes of 1941 [hereinafter the `State Pension Act'], to which statutes reference is made in Section 17 of said ordinance; ..." As we explain below, the ordinance, which is set out in the margin,1 may have adopted only the procedural provisions of the State Pension Act, and, secondly, even if the ordinance incorporates the substantive as well as the procedural provisions of the state act, the substantive provisions as incorporated into the pension ordinance must be construed in light of the well-established rule of liberal construction of pension plans to protect the reasonable expectations of the employees. Applying this rule to the State Pension Act as incorporated into the ordinance, we conclude that the absence of any express limitation of the City's liability to the amount in the fund renders it liable for the full amount of benefits provided by the pension plan.
[1a] Three resolutions of the city council and an ordinance adopted by that council providing for submitting the pension ordinance to the electorate mention the State Pension Act. Resolution No. 3339, adopted May 4, 1943, states in its title, "Establishing a Retirement Fund in Accordance with Chapter 321 of the Statutes of 1937 as amended by Chapter 1080 of the Statutes of 1941." The only other reference to the state act in the resolution is as follows: "Whereas, under and by virtue of Chapter 1080 of the Statutes of 1941, before said proposed Ordinance can be presented for passage, a vote by secret ballot must be taken by the members of each Department separate from the other for their approval or disapproval of such retirement proposal."
Resolution No. 3341, adopted on May 10, 1943, declaring that an ordinance should be drafted to be placed on the ballot at the general municipal election to be held June 21, 1943, contains only the following reference (in addition to that made in the title) to the state act: "Whereas, in accordance with the Statute in such case made and provided, the proposed Ordinance was submitted to the Eureka Paid Fire Department for a vote thereon and to the Eureka Paid Police Department for their vote thereon, by Resolution No. 3339, ..."
Ordinance No. 2256, adopted on May 18, 1943, provides for a general municipal election submitting to the electorate an ordinance establishing a contributory retirement system for members of the police and fire departments. The only reference to the state act in this ordinance is as follows: "That the General Laws of the State of California, Chapter 321 of the Statutes of 1937, as amended by Chapter 1080 of the Statutes of 1941, provides that Ordinances may be passed by Incorporated Cities, either by the Council by a two-thirds majority vote or by a majority vote of the Electorate of the City, for the establishment of a Retirement and Pension System.... That in accordance with such General Laws, an Ordinance was proposed to carry into effect the provisions thereof for the Eureka Paid Fire Department and Eureka Paid Police Department. That after said Ordinance had been proposed, Resolution No. 3339 was duly passed... the proposed Ordinance ... establishing a Retirement Fund for the members of the Eureka Paid Fire Department and the members of the Eureka Paid Police Department in accordance with Chapter 321 of the Statutes of 1937, as amended by Chapter 1080 of the Statutes of 1941." (§ 3.)
Finally, Resolution No. 3348, which declares the pension ordinance to be the law of Eureka, does not mention the State Pension Act.2
The ordinance "Establishing a Contributory Retirement System for Members of the Fire Department and Police Department of the City of Eureka" does not mention the State Pension Act in its title or in any of its substantive provisions, many of which differ from the state act.3 The ordinance mentions the state act only in section 17, which governs the extension of the pension plan to other municipal employees. (See fn. 1, supra.)
The only section of the ordinance mentioning the state act thus merely adopts the procedure established by the act for the inclusion of municipal employees into a contributory pension and retirement plan. (See § 2 of the State Pension Act, supra, fn. 3.) Resolution No. 3339, declaring the proposed pension ordinance, follows the notice requirement of section 2 of the act. (See fn. 3, supra.) And Resolution No. 3341, which declares that a pension ordinance should be drafted and placed on the ballot, and Ordinance No. 2256, which provides for the election, follow the requirement in section 1 of the act that the pension system be adopted by a majority vote of the electorate. (See fn. 3, supra.)
The substantive provisions of the pension ordinance, on the other hand, vary from those of the state act. Section 7 of the ordinance gives to the surviving widow, children, or other heirs of a member of the fire or police department who died from a cause unconnected with his employment, a right to part of the contributions of the decedent plus interest. The State Pension Act contains no corresponding provision.
Section 10 of the ordinance requires the City to contribute a sum "not less than" that contributed by the employees, while section 3, subdivision (c), of the state act provides that the City's mandatory contribution to the fund "shall not exceed" that contributed by the employees. And more importantly, section 11 of the ordinance, which has no corresponding provision in the state act, provides that in case of insufficient pension funds, employee contributions can be increased and/or pension payments pro rata decreased only by majority vote of the employees. The state act, on the other hand, is completely silent on the effects of insufficient pension funds.
Finally, section 19 of the ordinance, which has no corresponding section in the state act, vests a "property interest" in each person entitled to the benefits of the ordinance, "for the purposes of withdrawal, ... an estate to his dependents and heirs in a sum equivalent to the amount he shall have contributed, ... and for disability and retirement payments to the full extent of the provisions herein." (Italics added.)
Reading section 3 of the ordinance, which provides that those entitled to retirement pensions "shall" receive a pension equal to one-half of the salary attached to the rank held for one year preceding retirement, together with sections 10, 11, and 19, one can conclude only that a person entitled to retirement or disability benefits under the ordinance, as well as any beneficiary of the employee, is entitled to the amount specified in the ordinance regardless of the amount in the fund. Therefore, either the city owes a continuing obligation to contribute to the fund those amounts adequate to fulfill current and future claims under the ordinance, or the city bears a general liability under the ordinance unlimited by its statutory obligation to make contributions to the pension fund. Of course, either alternative equally protects the member of the pension plan (and his potential beneficiaries), and both are in line with "the well-recognized rule that all pension laws are liberally construed to carry out their beneficient policy." (England v. City of Long Beach (1945) 27 Cal.2d 343, 346-347 [163 P.2d 865]; Wendland v. City of Alameda (1956) 46 Cal.2d 786, 791 [298 P. 863]; Dillard v. City of Los Angeles (1942) 20 Cal.2d 599, 602 [127 P.2d 917]; Klench v. Board of Pension Fund Comrs. (1926) 79 Cal.App. 171, 187 [249 P. 46].)
[2] Charter cities which possess complete power over municipal affairs may adopt part of a general law in an ordinance governing a municipal affair without thereby being bound by all the provisions of that general law. (City of Redondo Beach v. Taxpayers, Property Owners, etc. City of Redondo Beach (1960) 54 Cal.2d 126, 137 [5 Cal.Rptr. 10, 352 P.2d 170]; City of Santa Monica v. Grubb (1966) 245 Cal.App.2d 718, 723-726 [54 Cal.Rptr. 210]; cf. Mullins v. Henderson (1946) 75 Cal.App.2d 117, 130 [170 P.2d 118]: "none of [the cases involving charters expressly incorporating general laws] hold that a reference to a general law for one express purpose also incorporates the law in any other respect.") The City here agrees that establishment of an employee pension plan is a municipal affair.
"In 1917, the city of Eureka availed itself of the privilege given to it by the [1914] amendments of sections 6 and 8 of the [California] constitution, ... and amended section 22 of article III of its freeholders' charter to provide that thereafter the city should `have the power to make and enforce any and all laws and regulations in respect to municipal affairs, subject only to the restrictions and limitations provided in this charter as the same now is or may be hereafter amended; ... and no enumeration or specific statement herein of any particular powers shall be held to be exclusive or a limitation of the foregoing general grant of powers.' (Stats. 1917, p. 1743.) By this amendment to its charter the city brought itself within the conditions of the amendments of 1914 to sections 6 and 8 of article XI of the constitution. Thereupon, according to the terms of those sections, its powers over municipal affairs became all-embracing, restricted and limited by the charter only. The result is that the city has become independent of control by general laws upon municipal affairs. [Citation.]" (Italics added.) (Sunter v. Fraser (1924) 194 Cal. 337, 343 [228 P. 660].)
[3] Chartered cities have full power to regulate municipal affairs, and ordinances governing municipal affairs supersede general laws insofar as the latter conflict with the ordinance unless the state has preempted the field. (See In re Hubbard (1964) 62 Cal.2d 119, 128 [41 Cal.Rptr. 393, 396 P.2d 809]; 5 McQuillin, Municipal Corporations (3d ed. 1949) § 15.20, at p. 98; 6 McQuillin, op.cit. supra, § 21.33, at pp. 244-246.) [4] The State Pension Act by its own terms makes clear that its provisions are not intended to preempt the field of pensions for municipal employees. (See section 1, supra, fn. 3; cf. Grace v. City of Los Angeles (1967) 249 Cal.App.2d 577, 584 [58 Cal.Rptr. 388].)
[5] The City contends, however, that because its charter contains no express provision relating to pension plans the City was required to incorporate all of the State Pension Act. The City's contention rests on Blake v. City of Eureka (1927) 201 Cal. 643 [258 P. 945], a decision which conflicts with the purpose of the 1914 amendment to the California Constitution and the general case law on the power of charter cities. We therefore now overrule Blake.
Blake held (201 Cal. at p. 657) that a section of the charter adopted in 1895 (Stats. 1895, p. 403), which provided that all matters not provided for in the charter shall be conducted pursuant to applicable general laws, governed over section 22 of the charter, adopted in 1917, which provided that the City shall have the power to make all laws governing municipal affairs regardless of the lack of any specific enumeration of power in the charter. (See Sunter v. Fraser, supra, 194 Cal. 337, at p. 343.)4Blake's holding ignores the purpose of the section added to the charter in 1895, as well as the 1914 amendment of the California Constitution which removed the necessity for enumeration of powers in the charter with respect to municipal affairs. (See generally, Graybiel, Review of Recent California Decisions on Municipal Law (1923) 11 Cal.L.Rev. 73, 91.) The 1895 provision merely restated "the opinion then prevailing that a city charter must contain a specific grant of power with reference to its conduct of municipal affairs." (West Coast Advertising Co. v. City & County of San Francisco (1939) 14 Cal.2d 516, 519 [95 P.2d 138].) [6] The purpose of the 1914 constitutional amendment was to free cities which availed themselves of "home rule" of the control of general laws in the area of municipal affairs and to give them complete control over such matters whether or not their charter expressly enumerated a power over the municipal affair in question. (See West Coast Advertising Co. v. City & County of San Francisco, supra, 14 Cal.2d at p. 521; City of Pasadena v. Charleville (1932) 215 Cal. 384, 388-389 [10 P.2d 745].)
City of San Jose v. Lynch (1935) 4 Cal.2d 760 [52 P.2d 919], refused to adopt the reasoning underlying Blake and therefore in effect overruled Blake. In Lynch, the City of San Jose, which adopted a "home rule" provision in 1934, argued that an improvement procedure ordinance was invalid because it conflicted with the State Improvement Act of 1911. The City urged that a 1915 charter provision, which required that general laws in force at the time would govern improvement procedures, constituted a charter limitation upon the City's power over municipal affairs and remained effective after the adoption of "home rule" in 1934. We rejected this contention, stating that the 1934 amendment of the charter "is general in that it is intended as an amendment of the entire charter, rather than amending separately each section relating to matters of purely municipal character. It must therefore be construed as having the effect of causing [the 1915 provision] to provide for the governing of special assessment street improvements by general law [unless a different procedure was provided] at the time of the improvement in the charter or by ordinance." (Italics added.) (4 Cal.2d at pp. 765-766.)
[1b] The 1917 amendment of the Eureka Charter similarly was intended as an amendment of the entire charter. (See Stats. 1917, ch. 12, at pp. 1742-1743.) And a new provision vesting complete control over municipal affairs in the city (Stats. 1917, ch. 12, § 22, pp. 1743-1744) specifically declares that enumeration of the power in the charter is not necessary to remove a municipal affair from the control of general law. [7] Section 22 must therefore be read as amending the 1895 provision to declare that general laws control with respect to municipal affairs unless the city by charter amendment or passage of an ordinance exercises its power acquired by adoption of "home rule" in 1914. (Cf. City of San Jose v. Lynch, supra, 4 Cal.2d 760, 765-766, overruling Blake v. City of Eureka, supra, 201 Cal. 643.) [1c] We are therefore not obligated to construe the pension ordinance in light of the State Pension Act, but rather must construe the state act in light of its incorporation (whether it be partial or whole) into an ordinance governing a municipal affair adopted by a city with "all-embracing" power over municipal affairs. (See Sunter v. Fraser, supra, 194 Cal. 337, 343.)
[8a] Even assuming that the pension ordinance incorporates the substantive as well as the procedural provisions of the State Pension Act, the question whether the City's liability is limited by the pension fund under the act as incorporated into the ordinance must be determined pursuant to the well-established rule of liberal construction of municipal pension plans. Applying that rule here, we hold that the pension payments directed to be made by section 3 of the pension ordinance (see fn. 1, supra) constitute general obligations of the City and are not limited in amount by the sums assigned to the pension fund by section 10 of the ordinance or section 3 of the State Pension Act. (Cf. England v. City of Long Beach, supra, 27 Cal.2d 343, 346-347; Eaton v. City of Los Angeles (1962) 201 Cal.App.2d 326, 332-333 [20 Cal.Rptr. 456]; 3 McQuillin, op.cit. supra, § 12.145, at p. 614.)
As previously discussed, section 3 of the ordinance provides that a member of the fire or police department, upon becoming eligible for retirement, "shall be paid" a yearly pension. Section 11 of the ordinance declares that the commission may not make pro rata reductions of pension payments unless a majority of each department by secret ballot votes approval of such reduction. Section 11, moreover, provides that the City may not increase the amount of salary deductions for the pension fund unless similar majority approval is received. Sections 3 and 11 together therefore mean that in the event the members do not vote for increased salary deductions or pro rata decreased pension payments, the City must provide the necessary sums to pay the pensions and other benefits provided for by the ordinance. Section 19 of the ordinance substantiates the propriety of this construction. Section 19 vests a "property interest" in each person entitled to the benefits of the plan "for purposes of withdrawal, ... an estate to his dependents and heirs in a sum equivalent to the amount he shall have contributed, plus a reasonable rate of interest, less any deductions provided, and for disability and retirement payments to the full extent of the provisions herein." (See also sections 7 and 14, supra, fn. 1.)
The provision in section 3 of the ordinance that the pension payments "shall be paid from such Fund," and the specifications of the amount the City is required to pay into that fund in section 10 of the ordinance and section 3 of the State Pension Act (assuming its total incorporation into the ordinance) do not require a construction of the pension plan different from the above interpretation which imposes upon the City a general obligation to make the payments specified in section 3 of the ordinance.
In England v. City of Long Beach, supra, 27 Cal.2d at page 346, the charter "provided that the city manager `shall include in his annual budget an amount equal to two per cent of the estimated pay of the members of the police and fire departments,... and the city council shall appropriate such amount to the "Relief and Pension Fund."' It also provided: `There shall be paid into the said fund, ... (b) The amount appropriated by the city council, ...'" The charter further "provided that after twenty years' service a fireman, upon his application, `shall be retired and paid in equal monthly installments from said fund a limited pension' of fifty per cent of his annual salary, ..." (27 Cal.2d at p. 347.)
The provision that the member eligible for retirement "shall be retired and paid ... from such fund" a certain pension and the provision that "the amount appropriated by the city council" "shall be paid into the said fund" are strikingly similar, respectively, to section 3 of the pension ordinance, on the one hand, and section 3 of the State Pension Act and section 10 of the ordinance, on the other. Our construction of the appropriation and payment of pension provisions of the charter in England therefore applies equally to the analogous provisions of the pension ordinance and State Pension Act (as incorporated into the ordinance) in the instant case.
As we said in England, the language of these provisions, together with other provisions of the pension ordinance (e.g., § 19) "may reasonably be interpreted to mean that a retiring fireman [or policeman] is entitled to a pension of the amount designated; that it was intended to provide an outright, unqualified pension; and that the words `from said fund,' together with the provisions of subdivision [(c) of section 3 of the State Pension Act and section 10 of the pension ordinance which assumedly incorporates it], were not intended as a qualification or limitation but that the pension fund was created, and payments ordered made therefrom, simply as an orderly and customary means of administering city moneys." (27 Cal.2d at p. 347.) Moreover, here, as in England, there is no language in either the State Pension Act or the pension ordinance "which expressly limit[s] pension payments to the money in the pension fund or the particular items mentioned as sources of income to the fund...." (27 Cal.2d at p. 347.) And finally, as we did in England, we must reject any argument "that if a general obligation had been intended, the voters would have stated specifically that the city should levy a tax sufficient to cover all pension payments. It may be argued with equal force ... that the voters could, but did not, specify that payments must be made from the pension fund alone." (27 Cal.2d at p. 347.)
The rationale underlying the rule of construction in England — that the City's liability for pension payments is not limited to the pension fund unless the pension plan clearly specifies that limitation — and the general rule that pension plans be liberally construed to promote their beneficent purpose (see e.g., Dillard v. City of Los Angeles, supra, 20 Cal.2d 599, at p. 602) rests on the same duty of fair dealing and obligation to protect the reasonable expectations of those whose reliance is induced that underlie the rules of construction in favor of the insured in insurance cases and in favor of the party of reduced bargaining power in cases involving other standardized contracts. (See, e.g., Gray v. Zurich Ins. Co. (1966) 65 Cal.2d 263, 269-271 [54 Cal.Rptr. 105, 419 P.2d 168], and cases and authorities cited therein.)
[9] The pension provisions of a city charter or ordinance form an integral part of the employment contract. (Kern v. City of Long Beach (1947) 29 Cal.2d 848, 852; Dryden v. Board of Pension Comrs. (1936) 6 Cal.2d 575, 579 [59 P.2d 104].) One purpose of providing pensions for municipal officers is to induce them to enter and continue in the service of the city. Another is to provide sufficient subsistence for retired or disabled officers (or their dependents) who have performed their obligations under the employment contract. (See Klench v. Board of Pension Fund Comrs., supra, 79 Cal.App. 171, 189.) Therefore, when the ordinance establishing the pension plan can reasonably be construed to guarantee full payment to those entitled to its benefits regardless of the amount in the fund established by the pension plan, then "we are, of course, required to construe the provisions liberally in favor of the applicant so as to carry out their beneficient policy." (Wendland v. City of Alameda, supra,46 Cal.2d 786, 791; Dillard v. City of Los Angeles, supra, 20 Cal.2d 599, 602.)
As we explained in England, "We must ... reject any theory that the provisions of the [ordinance] were designed to create an appearance of granting pensions while at the same time withholding the benefits by providing inadequate funds. (Cf. Gibson v. City of San Diego [(1945)] 25 Cal.2d 930, 935 [156 P.2d 737]....) The insufficiency of the fund may have resulted simply from a mistaken belief that the fund would be adequate or from an intent that it should constitute but a partial source of pension payments with the balance to be made up out of the city's general revenues.
"The injustice that would prevail if the provisions relating to the fund were construed to be a limitation on the obligation to pay pensions is apparent. The existence of a pension plan is, of course, a strong factor inducing persons to enter into or remain in a particular employment. Moreover, the employee[s] involved here [were] required to contribute a portion of [their] salary to the pension fund. Although provision was made for substantial pensions, the inadequacy of the provisions for maintenance of the pension fund was not apparent from the face of the [state statute or ordinance]. As before noted, [neither the state act nor the ordinance] expressly limit[s] the obligation of the city to the payment of the pensions from the pension fund. It obviously would be unjust to make the payment of pensions dependent upon the solvency of a particular fund, thereby depriving employees of the benefits of the system, unless we [are] compelled to do so by a clear, positive command in the [act or ordinance]." (Italics added.) (27 Cal.2d at p. 348.)
[10] We conclude that a charter city, possessed of plenary power to adopt a pension system imposing upon it a general obligation, cannot escape liability for those pension payments which it has led its employees reasonably to expect. In this respect it is no different than any other employer or public service institution which induces reliance upon a contract which may reasonably be interpreted to afford that protection which has been impliedly promised. [8b] We recognize that the City will not be so obligated if the pension plan which it adopts, either in the ordinance itself or the statutory scheme which it incorporates, clearly and explicitly limits its liability to the fund which the pension plan establishes. In the absence of such a limitation, and especially here, in light of the provisions that provide that an employee eligible for retirement or disability pay "shall" receive a certain amount, that vest the beneficiaries of the pension plan with a "property interest" in the fund for purposes of withdrawal and receipt of payments, and that declare that pension payments shall not be reduced without the majority approval of both departments, we must conclude that the City of Eureka bears a general obligation under the pension ordinance.
The judgment is affirmed.