About this time Quizquiz, having continued his march towards Quito, had his advanced guard attacked and defeated by one of the officers belonging to Benalcazar.  Quizquiz was much afflicted by this loss, and knew not well what to do or how to conduct himself.  The curacas or native chiefs in his army advised him to make his peace with Benalcazar; but he would not listen to this proposal, even threatening to put them to death if they ever mentioned such a thing again, and ordered them to prepare for returning into Peru.  But, as they were in want of provisions, and had no hopes of procuring any in the retreat which Quizquiz meditated, several of the curacas, at the head of whom was Huaypalca, remonstrated with him that it was better to die like brave men in battle against the Spaniards, than to retreat as he desired and to die of famine in a desert country.  As Quizquiz gave a very unsatisfactory answer to this remonstrance, Huaypalca gave him a thrust in the breast with his lance, and all the other curacas fell upon him with their clubs and axes, cutting him to pieces.  After this they dismissed the troops, allowing every one to go where he pleased.

On the arrival of Almagro and Alvarado at Pachacamac, they were joyfully received by the governor, who had come there from Xauxa to meet them.  Pizarro honourably fulfilled the entire agreement which Almagro had made with Alvarado, by the payment of the stipulated sum of 100,000 gold pesos; though several persons remonstrated against paying so large a sum, and alleged that Almagro had been constrained to enter into the agreement by necessity, and that Alvarado, instead of receiving so much money, deserved to be sent prisoner into Spain, for having invaded the government belonging to another person.  After receiving the money, Alvarado returned quietly to his government of Guatimala[33].

After the departure of Alvarado, the governor Pizarro began the establishment of a colony or settlement in the district of Pachacamac, which he named Ciudad de los Reyes, or the City of the Kings, otherwise called Lima, to which place he removed the colonists whom he had formerly established at Xauxa or Jauja; as the situation of Lima appeared to him exceedingly well calculated for trade, being near the sea[34].  From that place, Almagro went with a considerable force to Cuzco, and Pizarro visited Truxillo on purpose to place that colony on a proper footing, by making an equitable repartition of the lands and Indians among the colonists.

While at Truxillo, Pizarro received information that Almagro was inclined to take possession of the city of Cuzco, having been apprized by Ferdinand Pizarro, who was sent to Spain, that his majesty had appointed him a separate government extending a hundred leagues beyond the boundaries which had been assigned to Pizarro, and which Almagro alleged were considerably to the north of Cuzco.  Juan and Gonzalo Pizarro, brothers of the governor, who were then in Cuzco, and several