ORDERS:
ORDER AND DECISION
STATEMENT OF CASE
This matter comes before me on citations issued by the Department of Revenue and Taxation
for a violation of S.C. Code Ann. § 61-5-110(4) and 23 S.C. Code Regs. 7-13 for refilling minibottles
and failing to destroy empty containers. The Departments seeks a $1200 fine and the revocation of
the beer and wine permit as well as the minibottle license. The Respondent requested a hearing on
the violation and proposed penalty. After notice to the parties, a hearing was conducted on October
19, 1995. The Department established the violations and the request to revoke the minibottle license
is granted and a $1000 fine is imposed. The Department failed to establish the basis for revocation
or suspension of the beer and wine permit and therefore the Department's request is denied as to that
permit.
FINDINGS OF FACT
I make the following findings of fact, taking into consideration the burden on the parties to
establish their respective cases by a preponderance of the evidence and taking into account the
credibility of the witnesses:
1. Julia L. Cumbee was issued a beer and wine permit and a minibottle license for
Players, a lounge located at 101 Pineview Drive in North Augusta, South Carolina in June 1994.
2. James I. Cumbee, Jr. is the manager of the location.
3. In November 1994, James and Julia Cumbee separated and a divorce action was filed.
4. Upon agreement, James Cumbee would continue to operate the business. The license
and permit would remain in Julia Cumbee's name. She was advised by her divorce attorney not to
transfer the licenses until after the divorce was final. The divorce became final on March 7, 1995.
5. Eventhough the testimony conflicted, Mrs. Cumbee did not completely abdicate
operation of the business to Mr. Cumbee. She continued to visit Players weekly. She paid the bills,
ordered the supplies, and checked on the business.
6. On February 24, 1995, an Alcohol Enforcement Unit agent entered the club for an
inspection and found thirty-six (36) filled minibottles on the shelf behind the bar without seals and
twenty-two empty minibottles in a bowl with the caps on them. Citations were issued and received
by Mr. Cumbee.
7. Mrs. Cumbee closed the location after the citations were issued and it is still not open
for business.
8. At the time the violations were written, Mrs. Cumbee was not at the lounge. She
arrived after being contacted. The agent explained the citations. Mr. Cumbee was in the back of the
building asleep when the agent arrived. Richard Nelson was tending bar.
9. Although Mr. Cumbee kept the empty minibottles as a method of inventory, Mrs.
Cumbee never noticed that minibottles were being kept even when she worked in the location on a
regular basis before November 1994.
10. Mr. Cumbee denied knowledge of refilling the minibottles. Both James and Julia
Cumbee indicate that Richard Nelson was the culprit in refilling the minibottles and was refilling them
without their knowledge or consent.
CONCLUSIONS OF LAW
Based upon the foregoing Findings of Fact, I conclude, as a matter of law, the following:
1. S.C. Code Ann. § 1-23-600 (Supp. 1994) grants jurisdiction to the Administrative
Law Judge Division to hear contested cases under the Administrative Procedures Act.
2. S.C. Code Ann. § 61-1-55 (Supp. 1994) grants to the Administrative Law Judge
Division the powers, duties and responsibilities as a hearing officer in protested and contested matters
governing alcoholic beverages, beer, and wine.
3. Minibottles are taxed at a higher rate than other containers of alcoholic liquors. See
S.C. Code Ann. § 12-33-410 et seq. (1976 and Supp. 1994); S.C. Code Ann. § 61-5-130 (Supp.
1994).
4. A person who is licensed to sell alcoholic liquors and possesses on the licensed
premises any alcoholic liquors in containers other than sealed containers of two ounces or less or who
displays such sealed containers when the seals are broken shall be fined not less than $1000 and have
his license permanently revoked for any violation involving the avoidance of taxes. S.C. Code Ann.
§ 61-5-110(4) (Supp. 1994).
5. Refilling minibottles from a larger container constitutes the avoidance of taxes that
would be collected on the purchase and sale of filled minibottles. Carmen v. S.C. Alcoholic Beverage
Control Commission, ___ S.C. ___, 433 S.E.2d 885 (Ct. App. 1993), rev'd on other grounds ___
S.C. ___, 451 S.E.2d 383 (1994).
6. 23 S.C. Code Regs. 7-13 states that the holder of a minibottle license is required to
destroy, as soon as possible, all empty containers of two ounces or less. "Destroy" is defined as any
breaking, crushing or smashing which prevents possible reuse of these receptacles as containers of
alcoholic beverages.
7. Violation of a regulation promulgated by the Department relating to the sale of
alcoholic liquors constitutes a violation of Chapter 3, Title 61. S.C. Code Ann. § 61-3-70 (Supp.
1994).
8. A licensee may be held liable for violations of liquor regulations committed by his
agent while pursuing the ordinary business entrusted to him. The licensee is liable even though the
violations are committed in his absence and without his knowledge, consent, or authority. See 48
C.J.S. Intoxicating Liquors § 276 (1981).
9. As licensee, Mrs. Cumbee is responsible for all acts occurring on the licensed premises
and knowledge of prohibited acts is imputed to her. She regularly visited the licensed premises to
check on its operation. She was aware of the law and the regulations respecting the sale of liquor.
The manager of the location was asleep when the violation occurred. There is no excuse allowed in
the law for failing to perform one's job.
10. The Department has failed to demonstrate the basis for the suspension or revocation
of the beer and wine permit. It has cited no law and presented no facts of any violation pertaining
to the beer and wine permit to warrant a suspension or revocation.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
ORDERED, that Julia Cumbee has violated the provisions of S.C. Code Ann. § 61-5-110(4)
(Supp. 1994) by allowing minibottles to be refilled thereby avoiding the payment of taxes. The
minibottle license issued to Julia Cumbee is permanently revoked and a fine of $1000 is imposed to
be paid within ten days from the date of this Order. No additional penalty is imposed for violating
23 S.C. Code Regs. 7-13. The beer and wine permit issued to Julia Cumbee remains in effect.
AND IT IS SO ORDERED.
_________________________
ALISON RENEE LEE
Administrative Law Judge
October _____, 1995
Columbia, South Carolina |
