ORDERS:
FINAL ORDER AND DECISION
STATEMENT OF THE CASE
This matter comes before me pursuant to S.C. Code Ann. § 61-2-260 (Supp. 2000) and S.C. Code Ann. §§ 1-23-310 et seq. (1986 & Supp. 2000). The South Carolina Department of Revenue (Department) seeks to
impose a $400 penalty on Respondent for an alleged violation of S.C. Code Ann. §§ 61-6-1610 & -1620
(Supp. 2000) by permitting consumption of alcoholic liquors on its premises during restricted hours. In
addition, the Department seeks to impose a $400 fine on Respondent for an alleged violation of 23 S.C. Code
Ann. Regs. 7-86 (1976) by delivering beer on its premises during restricted hours.
After timely notice to the parties, a hearing was conducted on July 26, 2001, at the Administrative Law Judge
Division (ALJD or Division), Columbia, South Carolina. Upon review of the evidence and testimony
presented, this tribunal concludes that the preponderance of the evidence supports the imposition of a $400
fine upon Respondent for a violation of Regulation 7-86.
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. Respondent holds an on-premises beer and wine permit and a license allowing the possession or
consumption of liquor on the premises.
2. On Sunday, December 31, 2000, at approximately 11:15 p.m., South Carolina Law Enforcement Division
(SLED) Agents Marvin Brown and Richard R. Gregory conducted an unannounced inspection of
Respondent's premises. A New Year's Eve party was being conducted in the main or primary business area
of the establishment. Agent Brown issued two citations to Respondent, one citing a violation of Section 61-6-1610, and the other citing a violation of Regulation 7-86. In its Final Agency Determination, the
Department cited Respondent with violating Section 61-6-1610(A), which pertains to the unlawful sale and
consumption of alcoholic liquors sold in minibottles during certain hours. The Department also determined
that Respondent violated Regulation 7-86 by delivering beer or wine to persons during restricted hours.
3. Respondent served beer and liquor from an open bar at the party, but did not use minibottles.
4. Respondent contends that the event was a private party and conducted within the ambit of the law. The
Respondent advertised the party with the use of flyers. The party was limited to 100 individuals, who could
purchase tickets for $75 per person. The tickets were sold in advance of the day of the event, and no tickets
were sold on the day of the event, except one which was purchased just after midnight on Saturday by credit
card. The individual who made this purchase on early Sunday morning did not attend the Sunday night party.
The party was limited to individuals who had purchased tickets. Further, guests were checked off the guest
list as they arrived, and a sign on the door of the establishment indicated that the party was private and only
ticket holders would be admitted. That is, the party was not open to members of the general public, but was
restricted to ticket holders. No money exchanged hands at the party between the guests and the Respondent.
Moreover, the cash registers were turned off.
5. Respondent could not provide a lease agreement at the time of the agents' inspection, but at the hearing
produced a written lease bearing an execution date of December 26, 2000. The lessee was Christine K.
McCutcheon, daughter of a principal and co-owner of The Villepigue Tavern, Inc., the Respondent in this
matter. Christine McCutcheon was in Camden for the Christmas holidays in 2000, but she is not a resident of
South Carolina.
6. The lease provided for $1000 consideration in exchange for the use of the premises on the night in
question. However, no concrete evidence was presented to suggest that the monetary consideration was
given.
7. The facts do not indicate that the lease agreement was an arm's-length transaction. The lessee, Christine
McCutcheon, lived out-of-state and was only visiting during the holidays. While the party was purportedly
held by her, the guest list was not restricted to her friends or acquaintances, but was open to ticket purchasers
from the general public. Moreover, the lessee was not in attendance at the party. For all intents and purposes,
the lease arrangement was tantamount to Respondent entering into a lease agreement with itself.
8. By letter dated August 1, 2001, filed after the hearing, the Department indicated that it had charged
Respondent with the wrong statute. Rather than citing Respondent with violating Section 61-6-1610
(prohibiting consumption of alcoholic liqours sold in minibottles during restricted hours), the Department
should have cited Respondent with violating S.C. Code Ann. § 61-6-2600 (Supp. 2000) (prohibiting
possession or consumption of alcoholic liquors except as authorized by statute). The Department did not,
however, move to amend its agency determination to reflect the true nature of the offense with which
Respondent was charged.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude the following as a matter of law.
Under S.C. Code Ann. § 61-2-20 (Supp. 2000), the Department is charged with administering the laws
governing alcoholic liquors, beer, and wine. The Department's imposition of a $400 monetary penalty on
Respondent for a first violation of Regulation 7-86 at this location is proper. Regulation 7-86 provides in
pertinent part:
Any beer or wine sold, offered for sale or delivered to anyone from any licensed place of business or the
removal therefrom of any beer or wine between the hours of twelve o'clock Saturday night and sunrise
Monday morning is a violation against the beer and wine permit and such permit will be subject to suspension
or revocation, or [the Department] may accept a monetary penalty in lieu of suspension or revocation.
S.C. Code Ann. Reg. 7-86. The record establishes that beer was being delivered to Respondent's guests
between the hours of twelve o'clock Saturday night and sunrise Monday morning. This tribunal is unaware
of any express statutory exceptions that would allow beer and wine to be consumed at a private party on a
licensed premises during restricted hours.
Even if the argument were accepted that S.C. Code Ann. Regs. 7-14 (1976) (pertaining to private parties) and
S.C. Code Ann. § 61-6-1620(B) (pertaining to the consumption of alcoholic liquors in "separate and private"
areas of an establishment) should be read to allow such private affairs during restricted hours, a violation
would still stand. First, the lease, which Regulation 7-14 requires to be written and retained by the licensee
on the licensed premises, was not kept by Respondent on the licensed premises, and Respondent did not
produce the lease on the night of the inspection.
Further, this tribunal does not find that the evidence supports the proposition that the lease agreement was an
arm's-length transaction, and as such, the lease is deemed null and void. (1) As stated herein, the lessee was
the daughter of one of the principals of the licensed establishment. She is an out-of-state resident, who
presumably leased the premises to hold a New Year's Eve party for ticket holders of the general public. The
lessee did not attend the party; no concrete evidence was offered to show that she actually paid the $1000
consideration for the lease; and, no concrete evidence was offered to show that she received the proceeds
from the party, as contended. All of these facts suggest that the lease was not arm's-length and Respondent
was the true beneficiary of the agreement. In short, the lease was a subterfuge: the lease agreement was
tantamount to Respondent entering into an agreement with itself. In determining whether a purported "gift"
of liquor to customers, where the customers allegedly only paid for the mixer, constituted an "unlawful sale"
of alcohol, the South Carolina Supreme Court deemed such a transaction a sale. Winter v. Pratt, 258 S.C.
397, 189 S.E.2d 7 (1972). The Court stated: "where a sale or gift of liquor would be contrary to law, the
courts will discountenance any trick, artifice, or subterfuge intended to evade its terms." Id. at 403, 189
S.E.2d at 9. Here, the pretense of a valid lease agreement cannot be suffered. The true nature of the
transaction in the instant case was an attempt to circumvent the law to allow Respondent to conduct a New
Year's Eve Party. (2)
The Department argues that Respondent did not comply with Section 61-6-1610, Section 61-6-1620, or
Regulation 7-14 by failing to hold the party in separate and private areas of the licensed premises. This
argument must fail. The statutes must be construed to contemplate that the private party will be separate from
other simultaneously occurring business activities of the licensed establishment. In the present case, no other
business activities were occurring at the licensed establishment, and the private party was conducted in the
primary area of the establishment. Here, there would have been no purpose served in the private party being
conducted in separate private areas, as no general business of the licensed establishment was being conducted
at that time. Nonetheless, Respondent is found to have violated Regulation 7-86 for the aforementioned
reasons.
The Department, on the citation issued to Respondent and in its Final Agency Determination, also charged
Respondent with violating Section 61-6-1610. This section expressly applies to the sale and consumption of
minibottles during certain hours. Respondent did not sell or allow the consumption of alcoholic liquors in
minibottles. Rather, alcoholic liquors were served from full-size bottles. In a post-hearing letter, the
Department indicated that it charged Respondent under the wrong statute. The Department stated that it
should have cited Respondent with violating Section 61-6-2600 which prohibits the transportation,
possession, or consumption of alcoholic liquors except in a manner permitted under the alcoholic beverage
laws.
While the "requirement of notice in an administrative proceeding is not as strict or exacting as that in a
judicial proceeding[,] the notice must be reasonable under the circumstances of the particular case." 2 Am.
Jur. 2d Administrative Law § 285 (1994). "If notice of charges does not fully apprise a person of the nature
of the offense with which he or she is charged, the court may set aside an order of an agency for deficiency of
notice." Id. See also Burdge v. State Bd. of Med. Exam'rs, 304 S.C. 42, 46, 403 S.E.2d 114, 117 (1991)
(remanding a physician misconduct case to the Board because its "failure to give fair notice [to the physician]
of the allegations against him constitute[d] a denial of procedural due process"). Here, to refute the
Department's charges, Respondent presented evidence that it did not sell or allow the consumption of alcohol
from minibottles. The Department discovered its oversight in response to a request from this tribunal for
post-hearing clarification on its application of the purported law allowing the conduct of private parties
during restricted hours.
Clearly, there was a deficiency in the Department's notice and it is reasonable under the circumstances to set
aside the charge against Respondent for violating 61-6-1610. It should further be noted that the Department
did not seek to officially amend its administrative complaint. "If an administrative complaint is amended to
include new counts after the close of hearings, additional hearings must be held to address the new
violations." 2 Am. Jur. 2d Administrative Law § 292 (1994). No such amendment was sought here.
ORDER
THEREFORE, IT IS HEREBY ORDERED that Petitioner's request that Respondent be fined $400 for
violating 23 S.C. Code Ann. Regs. 7-86 (1976) is granted. Respondent shall remit $400 to the Department
within thirty (30) days of the date of this Order to satisfy the fine.
AND IT IS SO ORDERED.
______________________________
JOHN D. GEATHERS
Administrative Law Judge
Post Office Box 11667
Columbia, South Carolina 29211-1667
August 24, 2001
Columbia, South Carolina
1. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province
of the trier of fact. See S.C. Cable Television Ass'n v. Southern Bell Tel. & Tel. Co., 308 S.C. 216, 417
S.E.2d 586 (1992). Furthermore, a trial judge, who observes a witness, is in the better position to judge the
witness's demeanor and veracity and evaluate his or her testimony. See Mann v. Walker, 285 S.C. 194, 328
S.E.2d 659 (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984); McAlister v.
Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973). See
also Doe v. Doe, 324 S.C. 492, 502, 478 S.E.2d 854, 859 (Ct. App. 1996) (court as finder of fact "has the
authority to determine the weight and credibility of the evidence before him.").
2. See, e.g., Lackey v. Sacoolas, 191 A.2d 395 (Pa. 1963). In that case, a defendant "was catering to the
public but, in the enveloping vapors of subterfuge, thought to present himself as a private club" by hiding
behind the "smoke screen" of a bogus lease. Id. at 397. In rejecting this attempted circumvention of the law,
the Supreme Court of Pennsylvania emphasized that "[t]he flashing of a lease cannot ipso facto wipe out
obvious facts, conspicuous implications and manifest results." Id. The same holds true in this case. |
