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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
Martin M. Honan, Sam's East, Inc., d/b/a Sam's Club #6582 vs. SCDOR

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
Martin M. Honan, Sam's East, Inc., d/b/a Sam's Club #6582

Respondents:
South Carolina Department of Revenue, John M. Lane, III, Vito M. Bruno, W.N. Massalon and Frank Papson
 
DOCKET NUMBER:
99-ALJ-17-0279-CC

APPEARANCES:
For the Petitioner: David S. Cobb, Esquire

For the Respondents: James H. Harrison, Esquire and

Marlene T. Sipes, Esquire

For the Department: No Appearance
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter comes before the Administrative Law Judge Division pursuant to S.C. Code Ann. §§ 61-6-100 et seq. (Supp. 1998), § 61-6-910 (Supp. 1998), and §§ 1-23-310 et. seq. (1986 and Supp. 1998) for a contested case hearing. The Petitioner, Sam's East, Inc., through individual licensee Martin M. Honan, seeks a retail liquor license. The Department of Revenue (Department) made a Motion to be Excused stating that but for the protests it received, the license would have been granted. This motion was granted by my Order dated June 2, 1999. Respondents John M. Lane, III, Vito M. Bruno, W.N. Massalon and Frank Papson, who were originally Protestants in this matter, made Motions to Intervene through their respective attorneys. These Motions were granted by my Order dated August 24, 1999. A hearing was held on this matter on August 27, 1999, at the Administrative Law Judge Division.





FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the Petitioner and the Respondents, I make the following Findings of Fact by a preponderance of evidence:

1. Notice of the time, date, place and subject matter of the hearing was given to the Petitioner, Protestants, and Respondents.

2. The Petitioner is Martin M. Honan who is seeking a retail liquor license for Sam's East, Inc., d/b/a Sam's Club # 6582 (Sam's Club). Sam's Club is located at 95 Mathews Drive, Beaufort County, Hilton Head Island, South Carolina. The proposed location is in a building owned by Hilton Development Company and Missouri General Partnership. It is adjacent to Sam's Club and there will be no physical means of access between the two locations.

3. The qualifications set forth in S. C. Code Ann. § 61-6-110 (Supp. 1998) concerning the age, residency, and reputation of the Petitioner and/or licensee are properly established. Furthermore, the Petitioner has not had a license for the sale of alcoholic liquors revoked within the last five years and notice of the application was lawfully posted both at the location and in a newspaper of general circulation.

4. The licensee has no criminal record and is of sufficient moral character to receive a retail liquor license.

5. There was no evidence that the proposed location is within five hundred feet or unreasonably close to any church, school or playground.

6. No other member of Petitioner's household has been issued a retail liquor store license.

7. The Petitioner has not been issued more than three retail liquor licenses, nor does he have an interest, financial or otherwise, in more than three retail liquor stores.

8. The proposed retail liquor store is located in a commercially-zoned area of Hilton Head Island in a shopping center on Highway 278. There are approximately fifteen stores in this shopping center with at least three retail liquor stores in the general vicinity of the proposed location.

9. Respondent Frank Papson argues that a retail liquor license should not be issued for the Petitioner's store because:

a. Papson owns three liquor stores in the state of South Carolina and also owns two hundred shares of stock in Wal-Mart Stores, thereby giving him an interest in a fourth liquor store; and



b. the vicinity is already adequately served with liquor stores.



Mr. Papson is a stockholder in Wal-Mart, the parent company of Sam's East, Inc. He purchased his stock in Wal-Mart prior to any knowledge that Sam's East, Inc., would apply to sell liquor in his neighborhood.

10. Three licensed locations exist within the immediate area of the proposed location. Mr. Papson, who owns a competing retail liquor store in the area, testified that there is an adequate number of retail liquor stores in the area to service the population. He contends that if the Petitioner's store is opened, it would economically harm his retail liquor store in the adjacent shopping center. However, Mr. Papson presented no empirical evidence to support his proposition. I find that the evidence did not sufficiently establish that there are too many retail stores in the vicinity to safeguard the public health, safety, and welfare of the citizens who live in the area.

11. I find the proposed location to be suitable for a retail liquor license.



STIPULATIONSThe Petitioner stipulated at the hearing that Sam's East, Inc., would abide by the following stipulations if granted a retail liquor license:

1. The Petitioner will not use "Sam's" or "Discount" anywhere in the name of its retail liquor store; and



2. The employees in the retail liquor store will not dress in aprons or uniforms visually identifiable with "Sam's" stores.



CONCLUSIONS OF LAW

Based upon the above Findings of Fact, I conclude the following as a matter of law:

1. S.C. Code Ann. § 1-23-600 (Supp. 1998) grants jurisdiction to the Administrative Law Judge Division to hear contested cases under the Administrative Procedures Act.

2. S.C. Code Ann. § 61-2-260 (Supp. 1998) grants the Administrative Law Judge Division the responsibilities to determine contested matters governing alcoholic beverages, beer and wine.

3. S.C. Code Ann. §§ 61-6-110, et seq. (Supp. 1998) sets forth the requirements for

determining eligibility for a retail liquor license.

4. S.C. Code Ann. § 61-6-140 (Supp. 1998) prevents a licensee from possessing more than three retail licenses while S.C. Code Ann. § 61-6-150 (Supp. 1998) ultimately prohibits an individual from having an interest in more than three retail liquor stores in the state of South Carolina.

5. As to the Respondent's concern that he will have an interest in a fourth liquor store, S.C. Code Ann. § 61-6-150 sets forth, in relevant part:

No person, directly or indirectly, individually or as a member of a partnership or an association, as a member or stockholder of a corporation, or as a relative to a person by blood or marriage within the second degree, may have any interest whatsoever in a retail liquor store licensed under this section except the three stores covered by his retail dealer's licenses....



(Supp. 1998). Because Mr. Papson is a stockholder in Wal-Mart, the parent company of which Sam's East, Inc., is a subsidiary, his deduction is that granting this license would ultimately give him "an interest" in a fourth liquor store, in direct contravention to S.C. Code Ann. § 61-6-140 (Supp. 1998). The cardinal rule of statutory interpretation is to ascertain and effectuate the legislative intent. Bankers Trust of South Carolina v. Bruce, 275 S.C. 35, 267 S.E.2d 424 (1980). The legislature has here [in S.C. Code Ann. § 61-6-150] determined that it is desirable to proscribe the monopolization of the liquor industries by individual or corporate entrepreneurs. See, e.g. Grand Union co. V. Sills, 43 N.J. 390, 204 A.2d 853. To that end, "interest" is defined as:



The most general term that can be employed to denote a right, claim, title, or legal share in something....More particularly it means a right to have the advantage accruing from anything; any right in the nature of property, but less than title.



Black's Law Dictionary 812 (6th ed. 1990). In order to determine if an individual has an "interest" in a proposed liquor store so as to violate the statute, each situation would depend on its particular set of facts. Letter from Edwin E. Evans, S.C. Assistant Attorney General, to Nicholas P. Sipe, Executive Director, S.C. Alcoholic Beverage Control Commission (February 9, 1981) (1981 WL 158138). Of significant import would be factors such as whether compensation is related to profits of the corporation, or whether the employee [or person] had control over corporate decisions related to the retail liquor store. Id.

Wal-Mart has billions of shares in the open market and over 2,400 stores nationwide. In order for Mr. Papson to have an "interest" in the liquor store, he would have to have some form of "control" of the business to the point that he would gain monetary benefits from that one store and would be able to partake in the everyday decision-making processes in that store. Although Mr. Papson has the opportunity to attend shareholder meetings and to cast votes, the probability that his two hundred shares of Wal-Mart could "control" Sam's East, Inc., liquor store is highly improbable. If it was the intent of the legislature to allow "dabbling" stockholders to prevent large publicly-held corporations from holding liquor licenses, then the deduction could be made that all Mr. Papson had to do was purchase one share of Wal-Mart stock during the notice period of this license. As a general rule, courts reject a construction of words used in a statute when acceptance of a statutory interpretation would lead to a result so absurd that it could not possibly have been intended by the legislature or would defeat the plain legislative intention. Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 440 S.E. 2d 364 (1994) [citing Stackhouse v. Rowland, 86 S.C. 419, 68 S.E. 561 (1910) (courts will reject the plain and ordinary meaning of words used in a statute when to accept it would lead to a result so absurd that it could not possibly have been intended by the legislature or would defeat the plain legislative intention)].

Finally, Mr. Papson is not the applicant in this matter. In other words, he is not seeking to obtain an interest in a fourth liquor store. Rather, a company in which he owns stock and has virtually no form of "control" in is seeking a liquor store license. There is no evidence that Wal-Mart owns any interest whatsoever in Mr. Papson's liquor stores. Therefore, the concern that Mr. Papson expresses should not be for Wal-Mart's position in this matter but rather his own.

6. The ultimate crux of Mr. Papson's protest is that he will be in direct competition with this liquor store, a situation he is trying to prevent. Mr. Papson contends that the retail liquor license should be denied because there is an over saturation of retail liquor outlets in the area of the proposed location. S.C. Code Ann.§ 61-6-170 provides that "[t]he department may, in its discretion, limit the further issuance of retail dealer licenses in a political subdivision if it determines that the citizens who desire to purchase alcoholic liquors therein are more than adequately served because of (1) the number of existing retail stores, (2) the location of the stores within the subdivision, or (3) other reasons." (Supp. 1998). The primary rule of statutory construction is to ascertain and effectuate the intent of the legislature. Plyler v. Evatt, 313 S.C. 405, 438 S.E. 2d 244 (1993). The intent of the General Assembly in enacting Section 61-6-170 was not to ensure economic viability of businesses already licensed in the area, but to safeguard the public health, safety, and welfare of the citizens who live in the area. See Alok Pandey, Pandey, Inc., d/b/a Party Pop Shop/One Stop Liquor v. South Carolina Department of Revenue and Taxation, and Vestal McCarty, Docket No. 95-ALJ-17-0527-CC. However, aside from establishing that three licensed locations exist within the immediate area of the proposed location, Mr. Papson did not establish that the public safety, health or welfare is endangered by the issuance of a license in this case because of a plethora of retail liquor stores. Therefore, the proposed location is not unsuitable pursuant to Section 61-6-170.

7. Although "proper location" is not statutorily defined, broad discretion is vested in the trier of fact in determining the fitness or suitability of a particular location. Fast Stops, Inc. v. Ingram, 276 S.C. 593, 281 S.E. 2d 118 (1981).

8. The determination of suitability of location is not necessarily a function solely of geography. It involves an infinite variety of considerations related to the nature and operations of the proposed business and its impact upon the community within which it is to be located. Kearney v. Allen, 287 S.C. 324, 338 S.E. 2d 335 (1985).

9. Without sufficient evidence of an adverse impact on the community, the application must not be denied if the statutory criteria are satisfied. The fact that a Respondent objects to the issuance of a permit is not a sufficient reason by itself to deny the application. See 45 Am. Jur. 2d Intoxicating Liquors § 162 (Supp. 1995); 48 C.J.S. Intoxicating Liquors § 119 (1981).

10 In considering the suitability of a location, it is relevant to consider whether the testimony in opposition to the granting of a permit is based on opinions, generalities and conclusions, or whether the case is supported by facts. Smith v. Pratt, 258 S.C. 504, 189 S.E. 2d 301, (1972); Taylor v. Lewis, et al. , 261 S.C. 168, 198 S.E. 2d 801 (1973).

11. The Petitioner meets the statutory requirements for holding a retail liquor license at the proposed location with the stipulations set forth above.



ORDER

Based upon the above Findings of Fact and Conclusions of Law, it is hereby:

ORDERED that the retail liquor license of Petitioner Martin M. Honan and Sam's East, Inc., d/b/a Sam's Club # 6582, be granted upon the Petitioner's payment of the required fees and costs.

AND IT IS SO ORDERED.





_______________________________

Ralph King Anderson, III

Administrative Law Judge





November 15, 1999

Columbia, South Carolina


 

 

 

 

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