SC Administrative Law Court Decisions

This matter comes before me pursuant to S.C. Code Ann. §§ 1-23-600 (Supp. 1996), 1-23-310, et seq. (1986 & Supp. 1995), and 61-2-260 (Supp. 1996) upon a request for a contested case hearing by Henry J. Orr, d/b/a Vromans Private Club, Inc. ("Respondent"). Respondent was cited by agents with the State Law Enforcement Division ("SLED") with administrative violations of: (1) 23 S.C. Code Ann. Regs. 7-17(J) (Supp. 1996) for permitting consumption of liquor by a nonmember on November 17, 1996; (2) S. C. Code Ann. § 61-6-1600 (Supp. 1996) for selling alcoholic beverages in a minibottle to a customer during restricted hours on the morning of November 17, 1996, i.e., after the hour of 2:00 a.m.; and (3) 23 S. C. Code Regs. 7-86 (Supp. 1996) for selling beer during restricted hours on the morning of November 17, 1996. The South Carolina Department of Revenue ("Department") issued its Final Determination Letters dated June 5, 1997 and August 19, 1997 wherein it sought a fine of $400.00 for the violation of Regs. 7-86 and a fine of $500.00 together with revocation of the liquor license for violation of Regs. 7-17(J) and § 61-6-1600. At the hearing and in its prehearing statement, the Department sought a fine of $500.00 and revocation of both the sale and consumption ("mini-bottle") license and the on-premise beer and wine permit.

Respondent stipulates to the violations but wishes to offer evidence as to mitigation of the fines/penalties and revocation of the beer and wine permit and the sale and consumption ("minibottle") liquor license.

A hearing was held at the Anderson County Courthouse, Anderson, South Carolina, on October 16, 1997 pursuant to notice to the parties.

After carefully considering the evidence, together with previous violations against the licenses/permits held by the Respondent over nearly fifty (50) years, I find that a fine in the amount of $1,500.00 should be imposed for the sale and consumption ("mini-bottle") license violations and a fine of $500.00 should be imposed for the beer and wine violation.

STIPULATIONS

The parties stipulate to the following:

1. This tribunal has jurisdiction of the parties and the subject matter, and notice of the date, time, place and nature of the hearing was timely given to each party.

2. Vromans Private Club, Inc., is a nonprofit private club, licensed pursuant to S.C. Code Ann. § 61-6-1820 (Supp. 1996).

3. Henry J. Orr, a/k/a Henry J. Orrs, Sr., is the person to whom the Department issued the on-premise beer and wine permit and sale and consumption ("mini-bottle") license.

4. The club is located at 38 Pendleton Street, Greenville, South Carolina.

5. On November 17, 1996, four (4) agents with the South Carolina Law Enforcement Division ("SLED"), together with six (6) officers of the Greenville City Police Department, went to Vromans Private Club. SLED agent Roberts initially entered the club at approximately 2:25 a.m., paid a $5.00 cover charge, walked to the bar and purchased both a beer and a mixed alcoholic beverage containing liquor from a mini-bottle. Agent Roberts was not a member nor a bonafide guest of a member of the club.

6. The bartender on duty sold the beverages to Agent Roberts.

7. The sale of the beer and the mixed alcoholic beverage to the SLED constitute violations of Regs. 7-17(J), 7-86 and S. C. Code Ann. § 61-6-1600 (Supp. 1996).

8. The on-premise beer and wine permit and the sale and consumption ("mini-bottle") license as issued to Respondent at this location became valid on June 1, 1991. The club has held the permit and license since that date.

9. The by-laws of Vromans Private Club, Inc., dated February 8, 1990, were received by the South Carolina Alcoholic Beverage Control Commission (predecessor to the Department) on March 19, 1990.

10. Respondent had two prior violations at this location on February 24, 1994: (1) for possessing liquor in containers larger than two ounces as prohibited by former § 61-5-110 ( now § 61-6-2600); and (2) for advertising "free" and "all you can drink for one price" beverages as prohibited by § 61-13-875. Warnings were issued on the same date for failure to destroy empty containers and for happy hour violations on the beer and wine permit. No suspension or revocation of the permit or license was sought by the Department; however, a fine of $500.00 was imposed and paid for the violations.

11. On January 26, 1995, Respondent was issued a citation for violation of Reg. 7-17(J) for permitting the consumption of an alcoholic beverage by a non-member who was not a guest of a member. Respondent paid a $500.00 fine for this violation.

FINDINGS OF FACT

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to all parties.

3. Respondent Henry J. Orr, Sr., is the Designated Licensed Person, holding a private sale and consumption license and an on-premise beer and wine permit for the private club, Vromans Private Club, Inc., located at 38 Pendleton Street, Greenville, Greenville County, South Carolina. Mr. Orr is the President of the corporation which is a non-profit corporation.

4. Henry J. Orr, Jr., son of the Respondent, assists his father in the operation of Vromans Private Club and handles its day to day operation.

5. The club is only open for business on Friday and Saturday nights each week between the hours of 10:00 p.m. and 2:00 a.m. Mr. Orr, Jr. visits the club each night it is open for business. Other employees assist Mr. Orr, Jr. in its operation.

6. Respondent is 78 years of age. He has operated convenience stores and clubs and held liquor licenses and beer and wine permits for close to 50 years. During this lengthy period he has been cited only for the violations as enumerated herein.

7. Respondent has employees stationed at the entrance at the club to check identification of members. Members are issued membership cards. Since the violation which is the subject of this proceeding, management has initiated more aggressive policies to ensure that only members or guests of members are admitted. Further, patrons are stamped as members or non-members and by age.

8. The club, both previous to these violations and presently, hires two off-duty City of Greenville policemen whose job duties are to patrol the exterior of the club for security purposes. They patrol in their police uniforms and the city is paid for their services. Also, a security company is retained by the club; its officers provide security inside the club. These private security officers are licensed by SLED.

9. The building in which the club is located is owned by Respondent.

10. All employees at the club are educated and lectured in the laws and regulations pertaining to alcoholic beverage sales and are immediately terminated if the club is cited for an ABC violation as a result of their negligence.

11. The situation which led to the violations on February 24, 1996 involved the use of the club by a member for a private party. Management was not aware that liquor could only be served from mini-bottles at private parties; the club admitted the violation and paid the fine as imposed by the Department.

12. Respondent acknowledges that the employee who allowed a non-member into the club in January 1995 when the club was cited was derelict in his duties; Respondent admitted his culpability and paid the fine as imposed by the Department.

CONCLUSIONS OF LAW

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

1. S.C. Code Ann. § 1-23-600 (Supp. 1996) grants jurisdiction to the Administrative Law Judge Division to hear contested cases under the Administrative Procedures Act.

2. S.C. Code Ann. § Section 61-2-260 (Supp. 1996) grants to the Administrative Law Judge Division the powers, duties and responsibilities to hear contested case hearings arising under the provisions of Title 61 of the 1976 S. C. Code of Laws.

3. S.C. Code Regs. 7-17(J) (Supp. 1996) prohibits a licensee holding a private club sale and consumption ("mini-bottle") license from selling to or allowing consumption by a nonmember of the club. Such act is a violation against the license and is grounds for suspension of the license or a monetary penalty, or both.

4. S.C. Code Ann. § Section 61-6-1600 (Supp. 1996) provides that nonprofit organizations which are licensed by the Department may sell to members or guests of members alcoholic liquors in minibottles for consumption in the business establishment between the hours of 10:00 a.m. and 2:00 a.m. the following morning.

5. S. C. Code Regs. 7-86 (Supp. 1996) reads as follows:

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 South Carolina Alcoholic Beverage Control Commission may accept a monetary penalty in lieu of suspension or revocation. Any delivery or removal of beer or wine between these restrictive hours shall be prima facie evidence that a sale was made.

6. S. C. Code Ann. § 61-4-120 (Supp. 1996) provides that it is unlawful for a person to sell or offer for sale wine or beer in this State between the hours of twelve o'clock Saturday night and sunrise Monday morning. However, a business licensed pursuant to Article 5 of Chapter 6 (alcoholic liquors in mini-bottles) is authorized to sell such products during the hours in which the sale of such mini-bottles is lawful.

7. S. C. Code Ann. § 61-6-4270 (Supp. 1996) authorizes the imposition of a monetary penalty in an amount not less than one hundred ($100.00) dollars nor more than one thousand five hundred ($1,500.00) dollars upon the holder of a liquor license as an alternative to the suspension or revocation of a liquor license for violations of Articles 3, 5, 7 and 13 of Chapter 6 ("Alcoholic Beverage Control Act") or for a violation of any regulation pertaining to alcoholic liquors. Such discretion is in the trier-of-fact after a hearing is held in accordance with the Administrative Procedures Act.

8. All regulations promulgated by the former Alcoholic Beverage Control Commission

(now the jurisdiction is with the Department), effective on the date of the Government Restructuring Act of 1993, remain in force until modified or rescinded by the Department or the State Law Enforcement Division. 1993 S.C. Acts 181, §1604.

9. A licensee may be held liable for violations of liquor statutes and 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).

10. 23 S.C. Code Ann. Regs. 7-2(I) provides the liability for any penalty imposed is imposed both upon the non-profit corporation/association and the individual who holds the license for the use of such entity.

11. The evidence in the record, as stipulated to by the parties, shows that Respondent, through its employee, permitted the consumption of liquor by a nonmember and sold beer and liquor during restricted hours. However, mitigating circumstances exist in this case, given that Respondent has held liquor licenses and beer and wine permits for almost fifty (50) years and this is only the third instance on which violations were cited against either the license or permit. There was confusion about the law applicable to private parties when the club is leased to a member. Respondent immediately acknowledged the violation and paid the fine. The other situation involved a non-member being permitted to consume beer on the premises.

The facts herein involve one transaction whereby an agent of SLED was allowed to enter the club, to purchase an alcoholic beverage and consume it on the premises during restrictive hours. To revoke the license and permit would be punitive in nature. Additional safeguards have been put in place by management. Further, the club is only open two nights a week. Respondent's son visits the club to ensure it is complying with ABC statutes and regulations. Off-duty city of Greenville police are employed outside the location and private security officers are employed inside the location during its operating hours.

Accordingly, I conclude that the imposition of a monetary penalty along with the revocation of the license and the permit would be unduly harsh. Therefore, only monetary penalties will be imposed.

12. Permits and licenses issued by the State of South Carolina for the sale of liquor, beer, and wine are not rights or property, but are rather privileges granted in the exercise of the police power of the State. They are to be used and enjoyed only so long as the restrictions and conditions governing them are complied with. The Administrative Law Judge Division, as the tribunal authorized to grant the issuance of a permit, is likewise authorized for cause to revoke or suspend the permit. See Feldman v. S.C. Tax Comm'n, 203 S.C. 49, 26 S.E.2d 22 (1943).

13. S. C. Code Ann. § 61-6-2600 (Supp.1996) mandates that for a third offense within three years of the first offense of any provision of Article 5 of Title 61, which Article regulates alcoholic liquors in minibottles, a fine of not less than $500.00 and permanent revocation of the license.

14. S. C. Code Ann. § 61-4-250 (Supp. 1996) provides for penalties for violations of any

regulation pertaining to beer or wine, violations of the provisions of Chapter 4 entitled "Beer, Ale, Porter and Wine", and Chapter 21 or 33 of Title 12. Retail beer and wine violations are subject to a penalty of not less than twenty five ($25.00) dollars nor more than one hundred ($100.00) dollars. However, the trier of fact may suspend payment of a fine or a monetary penalty imposed under this code provision.

15. 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 the 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 A. 2 Dist. 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).

Accordingly, based upon the evidence presented, I conclude that a fine in the amount of $1,500.00 should be imposed for violation of Regs. 7-17(J) and § 61-6-1600, and a fine of $500.00 should be imposed for the violation of Regs. 7-86.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby:

ORDERED that Respondent shall pay to the Department a monetary fine in the amount of

$1,500.00 for violation of Regs. 7-17(J) and § 61-6-1600, and a fine in the amount of $500.00 for the violation of Regs. 7-86, and it is further

ORDERED that this Division retains jurisdiction to enforce the provisions of this Order.

AND IT IS SO ORDERED.

_____________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

October 16, 1997