
    [723 NE2d 73, 701 NYS2d 324]
    In the Matter of Robert Ganley, on Behalf of Himself and Other Former Members of the New York City Transit Authority and Housing Authority Police Departments, et al., Appellants, v Rudolph W. Giuliani, as Mayor of the City of New York, et al., Respondents. Lieutenants’ Benevolent Association of the City of New York, by Its President, Anthony Garvey, et al., Appellants, v City of New York et al., Respondents. In the Matter of Stanley Hill, as Executive Director of District Council 37, American Federation of State, County, and Municipal Employees, AFL-CIO, et al., Appellants, v City of New York et al., Respondents.
    Argued October 21, 1999;
    decided November 30, 1999
    
      POINTS OF COUNSEL
    
      Dienst & Serrins, L. L. P., New York City (Richard A. Dienst and Leslie H. Ben-Zvi of counsel), for appellants in the first above-entitled proceeding.
    I. As a matter of law, respondents may not tax appellants absent strict compliance with the conditions precedent set forth in City Charter § 1127. II. As a matter of law, City Charter § 1127 may not be imposed upon appellants absent compliance with the condition precedent of a written agreement. (Association of Surrogates & Supreme Ct. Reporters v State of New York, 79 NY2d 39; Matter of Legum v Goldin, 55 NY2d 104.) III. As a matter of law, appellants, as in invitim transferees, are exempt from City Charter § 1127. (Nickels v New York City Hous. Auth., 208 AD2d 203, 85 NY2d 917; Horne v Radiological Health Servs., 83 Misc 2d 446, 51 AD2d 544; Parsons v Lipe, 158 Misc 32, affd sub nom. Parsons v First Trust & Deposit Co., 243 App Div 681; People v George, 155 Misc 386; Stadler & Stadler v Long, 137 Misc 512; Carfi v De Martino, 181 Misc 428; Port Chester Elec. Constr. Corp. v HBE Corp., 782 F Supp 837; Complete Messenger & Trucking Corp. v Merrill Lynch Money Mkts., 169 AD2d 609; Patel v Orma, 190 AD2d 782.) IV. As a matter of law, appellants may not be taxed because Civil Service Law § 70 (2) and Matter of Town of Mamaroneck PBA v New York State Pub. Empl. Relations Bd. (66 NY2d 722) protect appellants’ rights as civil service employees. (Matter of Friedman v Kern, 171 Misc 332; Wood v City of New York, 274 NY 155.) V. As a matter of law, appellants are members of an existing “special class” who are subject to the grandfathering provisions of City Charter § 1127. (Matter of Tolub v Evans, 58 NY2d 1; Weissman v Evans, 56 NY2d 458.) VI. As a matter of law, City Charter § 1127 exceeds and contradicts Civil Service Law § 70 (2), thus violating the Municipal Home Rule Law. (Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99; People v De Jesus, 54 NY2d 465; Mc-Millen v Browne, 14 NY2d 326; Wholesale Laundry Bd. of Trade v City of New York, 17 AD2d 327, 12 NY2d 998; Matter of Marcus v Baron, 57 NY2d 862; Floyd v New York State Urban Dev. Corp., 33 NY2d 1.) VII. As a matter of law, the taxation of appellants by respondents in the absence of compliance with the conditions precedent of City Charter § 1127 violates the New York State Constitution. (County Sec. v Sea-cord, 278 NY 34; Matter of Legum v Goldin, 55 NY2d 104; Matter of United States Steel Corp. v Gerosa, 7 NY2d 454; Society of Plastics Indus. v City of New York, 68 Misc 2d 366.)
    
      O’Donnell, Schwartz, Glanstein & Rosen, L. L. P., New York City (Joel C. Glanstein and Howard Wien of counsel), for appellants in the second above-entitled proceeding.
    I. Respondents violated the express provisions of New York City Charter § 1127. Having failed to meet the requirements of section 1127, they illegally withheld payment from appellants. (Matter of Ocean Hill-Brownsville Governing Bd. v Board of Educ., 30 AD2d 447, 23 NY2d 483; Matter of Burch v Hawkins, 9 AD2d 6; Matter of Legum v Goldin, 55 NY2d 104; Horne v Radiological Health Servs., 83 Misc 2d 446, 51 AD2d 544; Parsons v Lipe, 158 Misc 32, affd sub nom. Parsons v First Trust & Deposit Co., 243 App Div 681, 269 NY 630; People v George, 155 Misc 386; Stadler & Stadler v Long, 137 Misc 512; Matter of Miller, 162 Misc 563, 252 App Div 872; Masi v Equitable Variable Life Ins. Co., 178 AD2d 515; Kamerman v Steinberg, 891 F2d 424.) II. Application of section 1127 to the affected employees deprived them of statutorily protected employment status and seniority in violation of Civil Service Law § 70 (2). (Matter of Town of Mamaroneck PBA v New York State Pub. Empl. Relations Bd,., 66 NY2d 722; Nickels v New York City Hous. Auth., 208 AD2d 203; Matter of Levitt v Board of Collective Bargaining, 79 NY2d 120.) III. Imposition of City Charter § 1127 violated City Charter § 1143 as it unlawfully altered affected employees’ existing compensation, privileges and obligations. IV. Imposition of section 1127 impaired the obligation of contract between the City of New York and the affected employees’ labor organization, Lieutenants’ Benevolent Association. (Home Bldg. & Loan Assn. v Blaisdell, 290 US 398; City of El Paso v Simmons, 379 US 497; East N. Y. Sav. Bank v Hahn, 326 US 230; Veix v Sixth Ward Bldg. & Loan Assn., 310 US 32; Allied Structural Steel Co. v Spannus, 438 US 234; Association of Surrogates & Supreme Ct. Reporters v State of New York, 79 NY2d 39.)
    
      Michael D. Hess, Corporation Counsel of New York City (Jane S. Earle and Pamela Seider Dolgow of counsel), for Rudolph W. Giuliani and others, respondents in the first and second above-entitled proceedings.
    I. City Charter § 1127 is a condition precedent to City employment that was specifically enacted to prevent the unfairness of a two-tiered agency in which the take-home pay of some City employees is greater because they live outside the City. That appellants were not, technically speaking, “seeking” City employment at the time of their mass transfer, and did not actually sign the requisite waivers— agreements to have the nonresidency payment deducted from their wages — is inconsequential in view of this local law’s salutary goal of encouraging those who both serve and receive benefits from the City to reside in the City. In refusing to carve out an exception for appellants, the courts below properly applied section 1127. (Matter of Legum v Goldin, 55 NY2d 104; Watts v McGuire, 102 Misc 2d 711, 81 AD2d 791, 55 NY2d 603; Korenyi v Department of Sanitation, 699 F Supp 388; Matter of Jose R., 83 NY2d 388; Doctors Council v New York City Employees’ Retirement Sys., 71 NY2d 669; Matter of New York City Asbestos Litig. [Brooklyn Nav. Shipyard Cases], 82 NY2d 342; New York State Bankers Assn. v Albright, 38 NY2d 430; United States v American Trucking Assns., 310 US 534, 311 US 724; Hammelburger v Foursome Inn Corp., 54 NY2d 580; Muller Constr. Co. v New York Tel. Co., 40 NY2d 955.) II. City Charter § 1127 is a term and condition of City employment. Civil Service Law § 70 (2) does not address terms and conditions of employment. Appellants commenced their City service by keeping their existing civil service titles, and have also been credited with the seniority that they accumulated while employees of the State, in full compliance with Civil Service Law § 70 (2). Application of City Charter § 1127 to appellants does not violate Civil Service Law § 70 (2). (Matter of Town of Mamaroneck PBA v New York State Pub. Empl. Relations Bd., 66 NY2d 722; Matter of New York City Dept. of Probation v MacDonald, 205 AD2d 372.) III. Appellants’ Municipal Home Rule argument is misplaced. City Charter § 1127 is neither in conflict with Civil Service Law § 70 (2), nor, as the Court below correctly held, is it preempted by Civil Service Law § 70 (2). (Consolidated Edison Co. v Town of Red Hook, 60 NY2d 99; Watts v McGuire, 102 Misc 2d 711.)
    
      Byron S. Menegakis, New York City, Jeffrey Schanback and Steven J. Rappaport for New York City Housing Authority, respondent in the second above-entitled proceeding.
    Petitioners fail to state a cause of action against the Housing Authority. (Fitzpatrick Constr. Corp. v County of Suffolk, 138 AD2d 446, 73 NY2d 807; Nickels v New York City Hous. Auth., 208 AD2d 203, 85 NY2d 917.)
    
      
      Leonard D. Polletta, New York City, and Richard J. Ferreri for appellants in the third above-entitled proceeding.
    I. Respondents deprived Emergency Medical Service (EMS) petitioners of the seniority credit guarantee of Civil Service Law § 70 (2) by deducting nonresidency tax payments after their functional transfer. (Nickels v New York City Hous. Auth., 208 AD2d 203, 85 NY2d 917; Matter of Prey v County of Cattaraugus, 105 Misc 2d 1091, 79 AD2d 205; Matter of City of Utica [Zumpano], 91 NY2d 964; Matter of Board of Educ. v Mills, 250 AD2d 122; Meringolo v Jacobson, 173 Misc 2d 650; Uniformed Firefighters Assn. v City of New York, 50 NY2d 85; Brennan v City of New York, 59 NY2d 791; People v Abranko, 157 Misc 2d 972; Periconi v State of New York, 91 Misc 2d 823; Matter of Tanner v County of Nassau, 88 AD2d 661.) II. Respondents’ involuntary enforcement of section 1127 nonresidency tax deductions upon EMS petitioners is contrary to Matter of Legum v Goldin (55 NY2d 104). (Uniformed Firefighters Assn. v City of New York, 50 NY2d 85; McCarthy v Philadelphia Civ. Serv. Commn., 424 US 645; Mandelkern v City of Buffalo, 64 AD2d 279; Matter of Levitt v Board of Collective Bargaining, 79 NY2d 12.) III. Respondents’ imposition of section 1127 upon EMS petitioners violates section 1143 of the City Charter. IV. Respondents’ imposition of section 1127 upon EMS petitioners unconstitutionally impaired the union’s collective bargaining agreement. (Allied Structural Steel Co. v Span-nus, 438 US 234; Association of Surrogates & Supreme Ct. Reporters v State of New York, 940 F2d 766, 502 US 1058; Home Bldg. & Loan Assn. v Blaisdell, 290 US 398.)
    
      Michael D. Hess, Corporation Counsel of New York City (Jane S. Earle and Pamela Seider Dolgow of counsel), for respondents in the third above-entitled proceeding.
    I. The City Charter § 1127 wage deduction is a term and condition of City employment that was specifically enacted to equalize the take-home pay of resident and nonresident City employees in order to encourage City residence. Civil Service Law § 70 (2) does not address such terms and conditions of employment. Appellants have retained their existing civil service titles and have been credited with the seniority that they accumulated as former Health and Hospitals Corporation employees. Accordingly, the Court below properly found that application of City Charter § 1127 to appellants does not violate Civil Service Law § 70 (2). (Matter of Town of Mamaroneck PBA v New York State Pub. Empl. Relations Bd., 66 NY2d 722; Matter of Levitt v Board of Collective Bargaining, 79 NY2d 120; Matter of New York City 
      
      Dept. of Probation v MacDonald, 205 AD2d 372; Matter of Rover v State Civ. Serv. Commn., 43 Misc 2d 858; Matter of Eagan v Livoti, 287 NY 464; Matter of Sullivan v Taylor, 285 App Div 638, 309 NY 927; Matter of Webster Cent. School Dist. v Public Empl. Relations Bd., 75 NY2d 619.) II. Appellants’ argument that City Charter § 1127 does not apply to them because they never sought City employment is similarly without merit. (Matter of Legum v Goldin, 55 NY2d 104.) III. City Charter § 1143, which applies solely to intra-agency transfers, is inapplicable here because appellants were not transferred from one City agency to another. Even if applicable, section 1143 would not preclude imposition of the section 1127 wage deduction. (Brennan v City of New York, 59 NY2d 791; Tadros v New York City Health & Hosps. Corp., 112 AD2d 85; Matter of Martin Assocs. v New York City Health & Hosps. Corp., 160 Misc 2d 58; Phillips v New York City Health & Hosps. Corp., 58 AD2d 768, 44 NY2d 807.)
   OPINION OF THE COURT

Wesley, J.

In Matter of Legum v Goldin (55 NY2d 104), this Court held that payments to the City of New York pursuant to section 1127 of the City Charter are premised on a contract between the City and certain of its nonresident employees. These related appeals now ask us to determine whether this section applies to nonresidents of the City who, as a result of a merger, were transferred from a public benefit corporation or authority to City agencies. We conclude that section 1127 does not apply and therefore reverse the orders of the Appellate Division.

Petitioners in Ganley are former members of the New York City Transit Authority and Housing Authority Police Departments who reside outside the City of New York and were involuntarily transferred to the New York City Police Department via mergers in April 1995 (see, Nickels v New York City Hous. Auth., 208 AD2d 203, affd 85 NY2d 917). Prior to the mergers, petitioners were not City employees. Therefore, they were not subject to section 1127 of the Charter (formerly section 820), which requires nonresident City employees, as a precondition to employment, to agree to make payments in lieu of personal income taxes to the City in an amount that is computed and determined as if they were City residents.

Petitioners in Hill are Emergency Medical Services personnel formerly associated with the New York City Health and Hospitals Corporation (HHC). These employees were transferred to the New York City Fire Department in March 1996 pursuant to an amendment of section 487 of the City Charter. They too, reside outside the City. Although Corporation Counsel in 1973 opined that section 820 of the City Charter applied to HHC employees because it was a City agency for purposes of this section, HHC did not enforce the section until 1982. Over the ensuing years HHC changed its policy, ultimately determining in 1989 that section 1127 applied to only those EMS employees hired on or after November 1, 1982 who were nonresidents on their date of hire or who later moved out of the City. Petitioners were hired by HHC between January 4, 1973 (the effective date of section 1127) and November 1, 1982 and therefore were specifically exempted from the statute.

The City executed Memoranda of Understanding regarding the mergers, which preserved certain rights, titles and privileges of petitioners’ former positions. Additionally the City sent, and all petitioners received, the following notice:

“Your acceptance of employment with the City of New York * * * upon transfer * * * shall constitute your agreement, pursuant to section 1127 of the New York City Charter, that if you are or become a nonresident of the City at any time during your City employment, you will pay to the City the equivalent of the personal income tax that you would owe if you were a City resident. This notice does not apply to you if you have been continuously employed by the [New York City Transit Authority] [New York City Housing Authority] [Health and Hospitals Corporation] from January 4, 1973 to the date of your transfer.”

Petitioners objected to the City’s proposed imposition of the nonresident payments in a number of ways. Petitioners in Ganley, for example, ran a full-page advertisement in a newspaper that protested their loss of the nonresident exemption. Additionally counsel for the Transit Police Department wrote a letter to Corporation Counsel protesting loss of the exemption. In Hill petitioners filed an improper practice charge with the New York City Office of Collective Bargaining, which alleged that by applying section 1127 to petitioners, the City improperly imposed a new condition of employment without the union’s agreement. Despite these protestations, the City began deducting the payments from petitioners’ paychecks.

Petitioners in Ganley sought a declaration that section 1127 is unconstitutional as applied to them, and related injunctive and monetary relief, including a refund of all amounts that the City withheld from their paychecks, together with interest, costs, disbursements and attorneys’ fees. Supreme Court dismissed the petition and complaint. The court determined that because the employees were notified of the section yet nonetheless accepted employment with the City, they confirmed their agreement to abide by the provisions of section 1127 (Matter of Ganley v Giuliani, 171 Misc 2d 654, supra). The Appellate Division modified by issuing a declaration against petitioners, and as so modified, affirmed. The Court held that since petitioners voluntarily entered into City employment after receiving notice of the transfer and the deductions, they implicitly accepted all the terms of the transfer (Matter of Ganley v Giuliani, 253 AD2d 579).

Petitioners in Hill also sought declaratory and injunctive relief, along with reimbursement of all moneys deducted due to enforcement of section 1127. Supreme Court enjoined enforcement of this section and directed the City to reimburse petitioners for the deductions. The court distinguished the trial court decision in Ganley and carved out an exemption for this particular class of nonresident City employees on the ground that petitioners were previously accorded exempt status by HHC (Matter of Hill v City of New York, 172 Misc 2d 327, 332). The Appellate Division reversed, relying on its decision in Matter of Ganley (supra) (Matter of Hill v City of New York, 253 AD2d 580).

In both cases, the Appellate Division certified to this Court the question whether its orders were proper. We reverse both orders, hold that petitioners are exempt from section 1127 and do not answer the questions certified as the orders appealed from are final (see, CPLR 5713).

Section 1127 of the City Charter provides:

“Condition precedent to employment.
“a. Notwithstanding the provision of any local law, rule or regulation to the contrary, every person seek ing employment with the city of New York or any of its agencies regardless of civil service classification or status shall sign an agreement as a condition precedent to such employment to the effect that if such person is or becomes a nonresident individual as that term is defined in section 11-1706 of the administrative code of the city of New York or any similar provision of such code, during employment by the city, such person will pay to the city an amount by which a city personal income tax on residents computed and determined as if such person were a resident individual, as defined in such section, during such employment, exceeds the amount of any city earnings tax and city personal income tax imposed on such person for the same taxable period” (emphasis added).

The statute was intended to equalize the take-home pay of City employees, both resident and nonresident, and encourages those who work for the City to live in the City (see, 2 Proceedings of Council of City of NY, Dec. 13, 1972, at 1543; Korenyi v Department of Sanitation, 699 F Supp 388, 397-398).

The City contends that the section applies to all nonresident City employees regardless of how they became employed. Furthermore, according to the City, petitioners were notified that, as City employees, they are subject to the section as a precondition of employment. The City argues that upon commencing City employment and cashing their paychecks, petitioners impliedly accepted the City’s employment conditions.

We disagree. Section 1127 envisions a voluntary, preemployment contract between a new employee and the City (Matter of Legum v Goldin, 55 NY2d 104, supra). Pursuant to this provision, new employees who do not reside in the City of New York agree by contract to pay an amount to the City of New York equal to a City resident’s City income tax liability {id., at 108). Signing the agreement is a condition precedent to employment (2 Proceedings of Council of City of NY, op. cit). Indeed, the statute explicitly applies to “every person seeking employment with the city.” (Emphasis added.)

Here, none of petitioners entered into a pre-employment contract for section 1127 deductions. To the contrary, these employees, who had tenured civil service status at their previous agencies, were involuntarily transferred to different departments under the City’s aegis. Petitioners did not seek City employment; nor did they sign an agreement with the City. Rather the City unilaterally merged them into its workforce. The City therefore cannot impose the nonresident deductions upon them. Moreover it is clear that petitioners, long-serving civil service employees, had few options available to them once informed of the transfer. To suggest that they were required to quit their employment to protect their rights ignores the obvious.

The City also argues that petitioners waived any right to challenge the imposition of this section when they cashed their paychecks and continued to work. Petitioners, however, protested the City’s unilateral deductions in several ways, clearly illustrating that they did not acquiesce in the transfers (see, General Motors Acceptance Corp. v Clifton-Fine Cent. School Dist., 85 NY2d 232, 236).

Accordingly, in Ganley and in Lieutenants’, the order of the Appellate Division should be reversed, with costs, and the cases remitted to Supreme Court for further proceedings in accordance with this opinion. The certified question should not be answered upon the ground that it is unnecessary.

In Hill, the order of the Appellate Division should be reversed, with costs, and the order and judgment of Supreme Court reinstated. The certified question should not be answered upon the ground that it is unnecessary.

Chief Judge Kaye and Judges Bellacosa, Smith, Levine, Ciparick and Rosenblatt concur.

In Matter of Ganley v Giuliani: Order reversed, with costs, and action and proceeding each remitted to Supreme Court, New York County, for further proceedings in accordance with the opinion herein. Certified question not answered upon the ground that it is unnecessary.

In Matter of Hill v City of New York: Order reversed, with costs, and order and judgment of Supreme Court, New York County, reinstated. Certified question not answered upon the ground that it is unnecessary. 
      
       A declaratory judgment action seeking similar relief also was commenced by the Lieutenants’ Benevolent Association of the City of New York, the authorized collective bargaining unit for Transit Authority and Housing Authority lieutenants. Supreme Court issued one decision covering both actions following an agreement by all counsel that the issues were precisely the same in both cases (Matter of Ganley v Giuliani, 171 Misc 2d 654, 656).
     