SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before this tribunal pursuant to S.C. Code Ann. § 61-2-260 (Supp. 2001) and S.C. Code Ann. §§ 1-23-310 et seq. (Supp. 2001). The South Carolina Department of Revenue ("Department") contends that Respondent Canton Restaurant Management Group of Columbia Corp. ("Respondent") permitted or knowingly allowed an underage person to purchase beer from Respondent's licensed establishment located at 724 Harden Street, Columbia, South Carolina, known as "Jungle Jim's," in violation of S.C. Code Ann. § 61-4-580(1) (Supp. 2001) and 23 S.C. Code Ann. Regs. 7-9(B) (Supp. 2001). For this third violation of this State's alcoholic beverage laws in as many years, the Department seeks to impose a 45-day suspension of Respondent's beer and wine permit and minibottle license.

After timely notice to the parties, a hearing was conducted on April 14, 2002, at the Administrative Law Judge Division in Columbia, South Carolina. Based upon the testimony and evidence presented at the hearing, I find that the Department's requested suspension of Respondent's beer and wine permit and minibottle license is appropriate.

FINDINGS OF FACT

Having carefully considered all testimony, exhibits, and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. Yu Sing Tam is the owner of Respondent and the named licensee on Respondent's on-premises beer and wine permit (#32001119PBW) and restaurant minibottle license (#32001119PSB) for the establishment located at 724 Harden Street, Columbia, South Carolina, known as Jungle Jim's.

2. On September 13, 2001, South Carolina Law Enforcement Division (SLED) Agents Marvin Brown and Konnie Smith, with the assistance of Underage Cooperating Individual (UCI) Joe L. Peeples, Jr., conducted a routine sting operation at the licensed establishment.

3. The UCI, accompanied by Agent Brown, entered the patio area of Jungle Jim's at approximately 9:00 p.m. on September 13, 2001. The UCI approached a walk-up window to the bar located inside the restaurant and ordered a bottled beer from Patrick Dennis, who was helping tend the bar at the time. Mr. Dennis delivered the beer to the UCI, and received payment for the beer from him. During the purchase, Mr. Dennis did not request the UCI's Driver's License or any other form of identification for the purposes of verifying his age, nor did he inquire as to the age of the UCI. Further, the UCI did not indicate verbally or through any physical gesture or assertion that he was twenty-one years of age. Agent Brown witnessed the transaction between the UCI and Mr. Dennis.

4. At the time of the sale, the UCI was eighteen years old. On the date of the hearing before this tribunal, the UCI's physical appearance accurately reflected his physical appearance on the night in question. 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 twenty-one years of age.

5. After purchasing the beer, the UCI went in the bathroom at Jungle Jim's and collected a sample of the beer in a plastic bottle. Agent Brown and the UCI then exited the establishment and gave Agent Smith the plastic bottle containing the beer sample and the empty beer bottle from which the sample had been taken. Agent Brown then re-entered Jungle Jim's and approached Mr. Dennis. Introducing himself as a SLED agent, Agent Brown informed Mr. Dennis that he had sold beer to an underage individual.

6. As a result of the sale, Agents Brown and Smith issued a criminal citation to Mr. Dennis, and issued a citation to Respondent for violating 23 S.C. Code Ann. Regs. 7-9(B) (Supp. 2001). Mr. Dennis was charged with a criminal violation of S.C. Code Ann. § 61-4-90 (Supp. 2001) for the transfer of beer to a person under the age of twenty-one. This matter is still pending.

7. On November 28, 2001, the Department issued a notice to Respondent sustaining the citation issued by the SLED agents against Respondent and imposing a 45-day suspension of its beer and wine permit and minibottle license as a penalty for the violation. Respondent has been cited for two prior violations of this nature within the past three years. Specifically, Respondent was cited for a violation of Regulation 7-9(B) on October 26, 2000, and was fined $800 for the offense. This violation was upheld by the Administrative Law Judge Division (ALJD or "Division") on November 19, 2001. See S.C. Dep't of Revenue v. Canton Rest., Inc., Docket No. 01-ALJ-17-0256-CC (S.C. Admin. Law Judge Div. Nov. 19, 2001). ⁽¹⁾ And, on April 30, 2000, Respondent was cited for violating 23 S.C. Code Ann. Regs. 7-86 (1976) for selling beer during restricted hours, and was fined $400 for the violation.

8. In response to the present charges, Respondent explained the circumstances surrounding the sale of the beer to the UCI. On the night in question, Mr. Dennis, a law student and president of the Palmetto Law Society (PLS), was hosting a non-private PLS event at Jungle Jim's. Mr. Dennis is not an employee of Jungle Jim's, and, at the outset of the event, he was not tending bar. However, as the number of patrons grew, Mr. Dennis specifically asked for and received permission from Mr. Tam to go behind the bar and assist the other bartenders with serving customers. ⁽²⁾ It was during this time that Mr. Dennis served the beer to the UCI. Further, while the PLS had pre-purchased a quantity of beer and liquor, which was made available to PLS members without charge, at the time Mr. Dennis was tending bar, the PLS's pre-purchased alcohol had run out and all alcohol sales, including that to the UCI, were being made from Respondent's supply and for its profit.

CONCLUSIONS OF LAW

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

1. The Department is charged with the responsibility of administering and enforcing the laws and regulations governing alcoholic beverages, including beer and wine. S.C. Code Ann. § 61-2-20 (Supp. 2001).

2. S.C. Code Ann. § 61-4-580(1) (Supp. 2001) prohibits holders of beer and wine permits from selling beer or wine to persons under twenty-one years of age. This Section states:

No holder of a permit authorizing the sale of beer or wine or a servant, agent, or employee of the permittee may knowingly commit any of the following acts upon the licensed premises covered by the holder's permit:

(1) sell beer or wine to a person under twenty-one years of age.

§ 61-4-580(1). A violation of that provision is "a ground for the revocation or suspension of the holder's permit." S.C. Code Ann. § 61-4-580 (Supp. 2001). Regulation 7-9(B) contains a similar prohibition on the sale of beer or wine to minors:

To permit or knowingly allow a person under twenty-one years of age to purchase or possess or consume beer or wine in or on a licensed establishment which holds a license or permit issued by the [Department] is prohibited and constitutes a violation against the license or permit. Such violation shall be sufficient cause to suspend or revoke the license or permit by the [Department].

23 S.C. Code Ann. Regs. 7-9(B) (Supp. 2001). Here, the Department alleges that Mr. Dennis, an agent of Respondent, knowingly allowed the UCI, a person under twenty-one years of age, to purchase a beer at Jungle Jim's, Respondent's licensed premises, in violation of Section 61-4-580(1) and Regulation 7-9(B).

3. Generally, in administrative proceedings, the burden of proof rests upon the party who asserts the affirmative of the issue. Leventis v. S.C. Dep't of Health & Envtl. Control, 340 S.C. 118, 132-33, 530 S.E.2d 643, 651 (Ct. App. 2000); 2 Am. Jur. 2d Administrative Law § 360 (1994); see also Alex Sanders & John S. Nichols, Trial Handbook for South Carolina Lawyers § 9.3, at 366-69 (2d ed. 2001) (stating that the burden of proof in civil matters is generally upon the party asserting the affirmative of an issue). More specifically, before the ALJD, "[i]n matters involving the assessment of civil penalties, the imposition [of] sanctions, or the enforcement of administrative orders, the agency shall have the burden of proof." ALJD Rule 29B. Therefore, in the case at hand, the Department must prove by a preponderance of the evidence that Respondent, through its agent, Patrick Dennis, permitted or knowingly allowed the UCI to purchase beer at the licensed establishment.

Respondent's Liability for the Actions of Mr. Dennis

4. Under Section 61-4-580(1), a beer and wine permit may be suspended or revoked for the sale of beer or wine to a minor knowingly made either by the permit holder or by a servant, agent, or employee of the permittee upon the licensed premises. ⁽³⁾ In the instant case, the Department contends that Mr. Dennis was acting as Respondent's agent when he served beer to the UCI on the night in question.

5. "Agency is a fiduciary relationship which results from the manifestation of consent by one person to another to be subject to the control of the other and to act on his behalf." Peoples Fed. Sav. & Loan Ass'n v. Myrtle Beach Golf & Yacht Club, 310 S.C. 132, 145, 425 S.E.2d 764, 773 (Ct. App. 1992) (citing Restatement (Second) of Agency § 1 (1958)). Here, Mr. Dennis had requested and received explicit permission from Mr. Tam to work behind the bar at Jungle Jim's; he had, therefore, manifested his consent to be subject to Respondent's control and to act on Respondent's behalf. Therefore, when Mr. Dennis sold the beer to the UCI he was acting as an agent for Respondent. Further, it is clear that, given the permission granted by Mr. Tam, Mr. Dennis was acting well within the scope of his actual authority as an agent when he served the UCI. ⁽⁴⁾

6. Pursuant to Section 61-4-580(1) and Regulation 7-9(B), Respondent is liable for the sale of beer made to the UCI by its agent, Mr. Dennis.

Knowingly Selling Beer to an Underage Individual

7. For a violation of Section 61-4-580(1) and Regulation 7-9(B) to lie, a permit holder or its agent must have knowingly sold beer or wine to an underage individual. In the present case, the Department contends that Mr. Dennis had constructive knowledge that the UCI was under twenty-one years of age when he sold beer to the UCI.

8. In Feldman v. South Carolina Tax Commission, the South Carolina Supreme Court set forth a test for determining whether a sales clerk has knowingly sold an alcoholic beverage to an underage individual:

Within the meaning of the term, "knowingly," as used in [the alcoholic beverage laws], if the clerk knew that the [customer] was a minor or had such information, from his appearance or otherwise, as would lead a prudent man to believe that he was a minor, and if followed by inquiry must bring knowledge of that fact home to him, then the sale was made knowingly.

Feldman v. S.C. Tax Comm'n, 203 S.C. 49, 56, 26 S.E.2d 22, 25 (1943); see also Norris v. Greenville, Spartanburg & Anderson Ry. Co., 111 S.C. 322, 330, 97 S.E. 848, 850 (1919) ("When a person has notice of such facts as are sufficient to put him upon inquiry, which, if pursued with due diligence, would lead to knowledge of other facts, he must be presumed to have knowledge of the undisclosed facts."). Thus, if, when he sold the beer to the UCI, Mr. Dennis either (1) had actual knowledge that the UCI was under twenty-one years of age or (2) had constructive knowledge that the UCI was underage because the UCI's appearance would cause a prudent person to believe the UCI was under twenty-one years of age and would lead such a prudent person to conduct an inquiry to ascertain the age of the UCI, then Mr. Dennis knowingly sold beer to a person under twenty-one years of age.

9. Here, there is no evidence that Mr. Dennis had any actual knowledge of the UCI's age. However, the UCI's youthful appearance would cause a prudent person to believe the UCI was under twenty-one years of age, and would cause the same prudent person to conduct an inquiry to ascertain his age before selling alcohol to him. Despite his constructive knowledge that the UCI was underage, Mr. Dennis nevertheless failed to make a simple, prudent inquiry into the UCI's age before selling him a beer. Mr Dennis thereby knowingly allowed a minor to purchase beer at the licensed premises of Respondent in violation of Section 61-4-580(1) and Regulation 7-9(B).

Penalty

10. The Department has jurisdiction to revoke or suspend permits authorizing the sale of beer and wine. S.C. Code Ann. § 61-4-590 (Supp. 2001). Pursuant to such authority, the Department may suspend or revoke a beer and wine permit if the permittee has knowingly sold beer or wine to a person under twenty-one years of age. S.C. Code Ann. § 61-4-580 (Supp. 2001); 23 S.C. Code Ann. Regs. 7-9(B) (Supp. 2001); see also S.C. Code Ann. § 61-4-270 (Supp. 2001) (authorizing the Department to "revoke the permit of a person failing to comply with any requirements" in Chapter 4 of Title 61). Further, the Department may exercise this authority to suspend or revoke a permit for a first violation of the prohibition against selling beer and wine to minors. See, e.g., §§ 61-4-580, 61-4-590, 61-4-270. In lieu of such suspension or revocation, the Department may also impose a monetary penalty upon a permittee for selling beer and wine to minors. S.C. Code Ann. § 61-4-250 (Supp. 2001).

11. Further, once the Department has suspended or revoked a permit for a particular premises, the Department "may suspend or revoke all other licenses or permits held by the [permittee] if the suspended or revoked premises is within close proximity." S.C. Code Ann. § 61-2-140(E) (Supp. 2001).

12. S.C. Revenue Procedure 95-7 (1995) sets forth the Department's penalty guidelines for violations of the alcoholic beverage control laws. For retail beer and wine permits, Revenue Procedure 95-7 provides for a $400 fine for the first violation by a permittee, an $800 fine for the second violation, a 45-day suspension of the permit for the third violation, and revocation of the permit for the fourth violation. However, this document does not set binding norms for the Department, but rather only provides guidance to the Department in assessing penalties for violations of the alcoholic beverage laws. See Revenue Procedure 95-7, at ¶ 4 ("These are guidelines only and this advisory opinion does not establish a binding norm."). As such, Revenue Procedure 95-7 is not law and thus is not binding upon this Division. Cf. Home Health Serv., Inc. v. S.C. Tax Comm'n, 312 S.C. 324, 328, 440 S.E.2d 375, 378 (1994) (holding that "whether a particular agency proceeding announces a rule or a general policy statement depends upon whether the agency action establishes a binding norm") (citing Ryder Truck Lines, Inc. v. United States, 716 F.2d 1369 (11th Cir. 1983)).

13. The holder of a beer and wine permit is liable for the actions of its employees and agents who sell alcohol to underage persons. Here, Respondent's agent, Mr. Dennis, knowingly allowed the purchase of beer by a person under the age of twenty-one in violation of Section 61-4-580(1) and Regulation 7-9(B). This offense is Respondent's third violation of the laws governing its beer and wine permit within three years. Therefore, the Department's decision to suspend Respondent's on-premises beer and wine permit for 45-days is appropriate. Further, because Respondent's restaurant minibottle license covers the same premises as its beer and wine permit, the Department's decision to likewise impose a 45-day suspension upon that license is also appropriate.

ORDER

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

IT IS THEREFORE ORDERED that the Department shall suspend Respondent's on-premises beer and wine permit and restaurant minibottle license for the premises located at 724 Harden Street, Columbia, South Carolina, and known as "Jungle Jim's" for a period of 45 days.

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

May 8, 2002

Columbia, South Carolina

1. This case is currently on appeal before the circuit court in Richland County. However, the filing of the appeal did not automatically stay the enforcement of that decision, see S.C. Code Ann. § 1-23-380(A)(2) (Supp. 2001), and Respondent has not sought such a stay from the circuit court. Therefore, as the ALJD decision is still in effect despite the pending appeal, this tribunal will consider Respondent as having two valid previous violations on record for the purpose of assessing a penalty against Respondent. Cf. Kirpat, Inc. v. Del. Alcoholic Beverage Control Comm'n, No. 97A-08-012 RRC, 1998 WL 731577, at *3 (Del. Super. Ct. Mar. 31, 1998) ("The public safety and peace would certainly be breached if a store owner, caught selling to underage drinkers, was not held accountable for subsequent violations between offense and conviction. Theoretically, at least, an owner would be permitted to sell to any minor during that time period, and none of these offenses could be considered to enhance his penalty. This would be an unacceptable public policy."), aff'd, 720 A.2d 559 (Del. 1998) (unpublished table decision).

2. Mr. Dennis also testified that his brother is employed as a bartender at Jungle Jim's and that, in covering his brother's shifts and hosting other events, he has tended bar at Jungle Jim's on several previous occasions.

3. Such liability of permit holders for sales of beer and wine made to minors by their employees and agents should also be read into Regulation 7-9(B). See S.C. Dep't of Revenue v. Blackmon, Docket No. 01-ALJ-17-0225-CC, at 3 (S.C. Admin. Law Judge Div. Aug. 8, 2001) (holding that, under Regulation 7-9(B), "the sale of beer or wine to a minor is forbidden irrespective of whether the sale is made by the permit holder or by an employee of the permit holder").

4. Moreover, even if Mr. Dennis had exceeded his actual authority by serving alcohol to the UCI, Respondent would be liable for the sale under the doctrine of apparent authority. See Fernander v. Thigpen, 278 S.C. 140, 143, 293 S.E.2d 424, 426 (1982) ("The doctrine of apparent authority provides that the principal is bound by the acts of its agent when it has placed the agent in such a position that persons of ordinary prudence, reasonably knowledgeable with business usages and customs, are led to believe the agent has certain authority and they in turn deal with the agent based on that assumption."); see also R&G Constr., Inc. v. Lowcountry Reg'l Transp. Auth., 343 S.C. 424, 540 S.E.2d 113 (Ct. App. 2000) (discussing agency and the doctrine of apparent authority). Here, a person of ordinary prudence would have believed that Mr. Dennis had the authority to sell alcohol to the patrons of Jungle Jim's.