South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. American Photographic Services Inc.

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
American Photographic Services Inc., d/b/a American Photographic Services
 
DOCKET NUMBER:
07-ALJ-17-0080-CC

APPEARANCES:
Lynn M. Baker, Esquire, for Petitioner

Russell Wormald, Pro Se Respondent
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This matter comes before the Administrative Law Court (ALC or Court) pursuant to S.C. Code Ann. §§ 61-2-20 and 61-2-260 (Supp. 2007). The South Carolina Department of Revenue (Department) seeks a $500 fine from Respondent for his first alleged violation of 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2007) within a three-year period. After notice of the date, time, place, and nature of the hearing was timely given to all parties, a hearing was held before me on March 27, 2008 at the offices of the Administrative Law Court.

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 parties, I make the following Findings of Fact by a preponderance of the evidence:

1. The Respondent, Russell Wormald, holds an on-premises beer and wine permit for American Photographic Services, a convenience store that is located close to the Anderson County line at 901 East Fair Play Blvd. Fair Play, South Carolina. Respondent’s business is named American Photographic Services because Respondent also has an off-site photographic corporation and it was easier to keep the name of that business when incorporating the general store as a C-corporation. Respondent is the sole shareholder of the corporation.

2. On August 3, 2006, SLED agent, James R. Causey conducted an investigation of the premises by driving a youthful-looking underage cooperating individual (UCI) by the name of Jordan Lutz to the general store. The UCI entered the general store, carrying only a five-dollar bill and his identification, which correctly showed that he was sixteen (16) years of age. The UCI was allowed to purchase a 24 ounce can of Bud Light beer from Respondent’s employee Tammy McCall (McCall). McCall did not ask for the identification of the UCI or his age before making the sale of the beer to the minor.

3. SLED agent Causey was waiting in the parking lot when the UCI returned to the car with his can of beer. Accordingly, Causey entered the store and issued an administrative violation to the licensee for violating the provisions of Regulation 7-200.4 by permitting the purchase of beer by a person under the age of 21. Causey also issued a criminal citation to McCall for violation of S.C. Code Ann. 61-4-90 (Supp. 2007) for the transfer of beer to a person under 21.

4. The Department issued a proposed assessment to the Respondent on August 18, 2006 which instituted a $500 fine for the violation. Respondent timely protested the proposed penalty by letter postmarked November 17, 2006. The Department issued its Final Determination on January 12, 2007.

5. The Respondent further appealed to the ALC. In his Notice of Appeal, Respondent admits that McCall never received any training on how to check IDs.[1] Moreover, since the incident, no new policies or procedures have been implemented at American Photographic Services to prevent the sale of alcohol to underage individuals. However, Respondent did purchase a “Ruby” system to identify minors when driver’s licenses are scanned, but admitted that his employees could scan their own licenses to bypass the system. Since this incident, Respondent received another violation from SLED for selling alcohol to a minor at another one of his locations.

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. 2007) grants jurisdiction to the Court to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2007) grants the ALC 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 Comm’n, 203 S.C. 49, 26 S.E.2d 22 (1943).

3. Permitting or knowingly allowing a person under the age of twenty-one (21) to purchase or possess beer upon the licensed premises is a violation against a beer and wine permit. 23 S.C. Code Ann. Regs. 7-200.4 (Supp. 2007). Such a violation constitutes sufficient grounds for either suspension or revocation of the permit. Id. The term “knowingly” in Regulation 7-200.4 includes not only actual knowledge, but also knowledge that could be gained by reasonable inquiry when the circumstances are such as would cause a prudent man to inquire. See Feldman, 203 S.C. 49, 26 S.E.2d 22. A person may be found to act “knowingly” where it appears that the person “[shut] his eyes to avoid knowing what would otherwise be obvious.” State v. Thompkins, 263 S.C. 472, 484, 211 S.E.2d 549, 554 (1975).

4. Furthermore, the permittee is responsible for the acts of his servants, agents, or employees and cannot seek to avoid the consequences of a violation for lack of personal knowledge. See, e.g., Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 309, 257 S.E.2d 496, 497 (1979) (“It is well established that a principal is affected with constructive knowledge of all material facts of which his agent receives notice while acting within the scope of his authority.”); S.C. Law Enforcement Div. v. The “Michael and Lance,” 284 S.C. 368, 327 S.E.2d 327 (1985) (determining that civil forfeiture of a corporation’s boat based upon an employee’s illegal transporting of drugs was warranted even though the corporation claimed that the use of the boat to transport drugs was without its knowledge); 48 C.J.S. Intoxicating Liquors § 259 (1981) (a permit holder is responsible for the actions and conduct of employees utilizing the permit upon the permitted premises).

5. It is undisputed that McCall knowingly permitted the sale to the underage individual. While it is true that McCall is no longer employed by the Respondent, there is no evidence that McCall or any other employee at the store received training on how to properly check for identification. Additionally, there is no evidence that Respondent has instituted any further training policies or programs for his employees. The Department generally seeks a $500 fine for a first violation, within a three-year period, of Regulation 7-200.4. See Revenue Procedure 04-4. Although this Court has the authority to impose a lesser sanction than that sought by the Department,[2] in this case, the evidence demonstrates that Respondent has not changed any of its policies or procedures since the incident. Therefore, I find that the $500 fine sought by the Department in this case is an appropriate penalty.

ORDER

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

IT IS HEREBY ORDERED that Respondent shall pay a fine of $500 to the Department no later than thirty (30) days after the date of this Final Order and Decision.

AND IT IS SO ORDERED.

________________________________

Carolyn C. Matthews

Administrative Law Judge

April 16, 2008

Columbia, South Carolina



[1] Appellant admits that training is available through Budweiser and other companies. However, he offered no evidence that his employees at the convenience store utilize these programs.

[2] See Walker v. S.C. ABC Comm’n, 305 S.C. 209, 407 S.E.2d 633 (1991) (in administrative cases involving violations of laws regulating alcohol licenses and permits, fact-finder has authority to impose an appropriate penalty based upon the facts presented at the hearing).


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