SC Administrative Law Court Decisions

This matter comes before me upon request for a hearing by Respondent The Spinx Company, Inc. d/b/a Spinx No. 137 (Respondent) after it was cited for an administrative violation against its beer and wine permit. The South Carolina Department of Revenue (Department) seeks an $800.00 fine against the Respondent for violating the Alcoholic Beverage Control Act. A hearing was conducted before me on January 23, 2002, at the Administrative Law Judge Division (ALJD) in Columbia, South Carolina.

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, and taking into consideration the burden of persuasion by the parties, 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 Department and the Respondent.

2. Respondent holds an off-premises beer and wine permit for its location at 6400 White Horse Road, Greenville, South Carolina.

3. On June 19, 2001, an underage cooperating individual (UCI), Chadwick May, entered the Respondent's subject location. The UCI carried only his identification and some money into the store. The UCI's drivers license stated his age as eighteen (18) years old with a date of birth of July 14, 1982. The license was stamped "UNDER 21 until July 14, 2003." While inside the store, the UCI purchased a twenty-four ounce can of "IceHouse" beer from Andrea M. Hill, the clerk on duty. Ms. Hill did not request the UCI's identification or make any other attempt to ascertain his age prior to the purchase. At the time of the purchase, the UCI was eighteen years old.

4. On the date of the hearing before this tribunal, the UCI's physical appearance accurately reflected his physical appearance on June 19, 2001. The UCI appeared sufficiently youthful to merit an inquiry as to his age before allowing him to purchase alcohol. Based on this tribunal's observation of the UCI at the hearing, a reasonable person would conclude that the UCI was under the age of twenty-one.

5. It is the Respondent's policy to check the identification of its customers who purchase beer, wine and tobacco products. The Respondent conducts education programs, has purchased scanners for South Carolina driver's licenses and South Carolina issued identifications, and refuses to accept identification other than South Carolina drivers' licenses or South Carolina issued identification. Reminders of the laws governing the sale of alcohol and tobacco are on the time clock and must be acknowledged before an employee can clock in.

6. The Respondent violated the provisions of 23 S.C. Code Ann. Regs. § 7-9 (B) (Supp. 2001) by permitting the purchase of beer by an individual under the age of twenty-one.

7. This is the Respondent's second violation within the past three years at this location. On March 29, 2000, the Respondent permitted the purchase of beer by an individual under the age of twenty-one, for which the Respondent paid a $400.00 fine.

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. 2001) grants jurisdiction to the ALJD to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2001) grants the ALJD the authority to hear contested case hearings in matters governing alcoholic beverages, beer and wine.

2. Permits and licenses issued by this state for the sale of liquor, beer and wine are privileges to be used and enjoyed only so long as the holder complies with the restrictions and conditions governing them. See Feldman v. S.C. Tax Commission, 203 S.C. 49, 26 S.E. 2d 22 (1943).

3. Holders of beer and wine permits are forbidden from permitting "any act, the commission of which tends to create a public nuisance or which constitutes a crime . . . . " S.C. Code Ann. § 61-4-580(5) (Supp. 2001).

4. Permitting or knowingly allowing a person under the age of 21 to purchase or possess beer upon the licensed premises is a violation against a license or a permit. Such a violation constitutes grounds for either suspension or revocation of the beer and wine permit. 23 S. C. Code Ann. Regs. 7-9(B) (Supp. 2001).

5. The permittee is responsible for all acts of his servants, agents, or employees and cannot seek to avoid the consequences of a violation for lack of personal knowledge. Following that principal, the South Carolina Supreme Court upheld a civil forfeiture of a corporation's boat based upon an employee's transporting drugs even though the corporation claimed the use of the boat to transport drugs was without its knowledge. South Carolina Law Enforcement Division v. The "Michael and Lance," 281 S.C. 339, 315 S.E. 2d 171 (S.C. App. 1984). The Court held that "[a] principal is affected with constructive knowledge of all material facts of which its agent receives notice while acting within the scope of his authority." Id. at 173, citing Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 257 S.E. 2d 496 (1979). Likewise, the license holder is responsible for the actions and conduct of employees utilizing the permit upon the permitted premises. 48 C.J.S. Intoxicating Liquors § 259 (1981).

6. It is a generally recognized principle of administrative law that the fact-finder has the authority to impose an administrative penalty after the parties have had an opportunity to have a hearing and be heard on the issues. See Ohio Real Estate Comm'n v. Aqua Sun Investments, 655 N.E. 2d 266 (Ohio 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W. 2d 835 (Mo. App. S.D. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W. 2d 452 (Minn. App. 1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of Louisville v. Milligan, 798 S.W. 2d 454 (Ky. 1990); Com., Dept. of Transp. v. Slipp, 550 A.2d 838 (Pa. 1988); Dept. of Transp. v. Miller, 528 A.2d 1030 (Pa. 1987); State Police v. Cantina Gloria's, 639 A.2d 14 (Pa. 1994).

The administrative law judge, as the fact-finder, must also impose a penalty based on the facts presented at the contested case hearing. Parties are entitled to present evidence on all issues arising out of the contested agency action. Moreover, the tribunal responsible for conducting the contested case proceedings has the authority to decide the issues based on the facts presented and to make the final decisions on all the issues, including the appropriate penalty.

7. S.C. Code Ann. § 61-4-250(1) (Supp.2001) authorizes the imposition of a monetary penalty of not less than twenty-five dollars and not more than one thousand dollars. Additionally, the Department's "Penalty Guidelines" in Revenue Procedure 95-7 calls for fine of $800.00 upon the commission of a second violation. This is the penalty the Department is seeking against the Respondent. However, Revenue Procedure 95-7 also sets forth that it is only a guideline and does not establish a binding norm.

8. The Respondent clearly violated the provisions of 23 S.C. Code Ann. Regs. § 7-9 (B) (Supp.2001) by permitting the purchase of beer by an individual under the age of twenty-one. This is the Respondent's second violation in three years. I recognize the difficulties present in hiring individuals who will meticulously comply with Respondent's policies regarding the sale of alcohol. However, this is the Respondent's second violation within the past three years at this location. Therefore, I find that that a fine of $800.00 is warranted in this case. ⁽¹⁾

Argument

At the hearing before the ALJD, counsel for Respondent argued that there was no

probable cause for SLED to charge Ms. Hill, the clerk, with violating S.C. Code Ann. § 61-4-90 (Supp. 2001), which states, in pertinent part:

It is unlawful for a person to transfer or give to a person under the age of twenty-one years for the purpose of consumption beer or wine at any place in the State.

S.C. Code Ann. § 61-4-90 (Supp. 2001).

Because there is no evidence that the UCI ever intended to consume the beer he purchased, counsel argued, Ms. Hill could not possibly be guilty of violating § 61-4-90. Consequently, counsel argued, a finding that Respondent violated 23 S.C. Code Ann. Regs. 7-9(B) (Supp.2001) would allow the "rotten apple" of Ms. Hill's allegedly erroneous arrest to taint Respondent's administrative proceedings. Counsel's "rotten apple" argument may be a valid one for criminal proceedings; however, this tribunal has jurisdiction only over the administrative violation. Ms. Hill's criminal charge of transferring beer for a underage person's consumption is not before this tribunal. Instead, Respondent's alleged violation of 23 S.C. Code Ann. Regs. 7-9(B) (Supp. 2001) is the sole issue to be determined. The Department need not rely on Ms.Hill's arrest to establish Respondent's violation of 7-9(B). ⁽²⁾

In conclusion, the Respondent violated the provisions of 23 S.C. Code Ann. Regs. 7-9(B) (Supp.2001) by permitting the purchase of beer by an individual under the age of twenty-one.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED that Petitioner's request that Respondent be fined $800.00 for violating 23 S.C. Code Ann. Regs. 7-9(B) (Supp.2001) is granted. Respondent shall remit $800.00 to the Department within thirty (30) days of the date of this Order to satisfy the fine.

AND IT IS SO ORDERED.

_________________________________

C. DUKES SCOTT

ADMINISTRATIVE LAW JUDGE

February 6, 2002

Columbia, South Carolina

1. I have allowed evidence of such actions on the part of the permitee to mitigate the penalty where a suspension or revocation of the permit is sought. However, the fine of $800.00 being sought here is not excessive, given the seriousness of placing alcohol into the hands of a minor, even considering the efforts undertaken by the Respondent to prevent such transfers.

2. Counsel's argument is not dismissed lightly. One must question Law enforcement's practice of routinely charging clerks with § 61-4-90 for selling alcohol to a UCI, whom no one would argue actually intended to consume that alcohol. Nevertheless, the administrative charge is not contingent on either the charging or convicting of Ms. Hill with violating § 61-4-90. Therefore, I cannot dismiss an administrative charge in view of the uncontroverted evidence (Ms. Hill did sell beer to an underaged individual) in this case.