SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before me pursuant to S.C. Code Ann. §§ 1-23-310, et seq. (1986 & Supp. 1996), upon request for a contested case hearing by Gwendolyn N. Paul, d/b/a Blind Horse Saloon ("Respondent"). Respondent was cited with two violations of 23 S.C. Code Ann. Regs. 7-17(J) (1976) for allegedly permitting consumption of liquor by nonmembers on or about June 14, 1996 and October 4, 1996 at 1035 Lowndes Hill Road, Greenville, South Carolina ("location"). The South Carolina Department of Revenue ("Department") seeks a fine of $500.00 for each of the alleged violations and revocation of the sale and consumption (minibottle) license.

A hearing was held at the offices of the Administrative Law Judge Division ("Division"), Edgar A. Brown Building, 1205 Pendleton Street, Columbia, South Carolina, on November 17, 1997.

Considering all the relevant evidence in this case, I find that a fine in the amount of $1,500.00 is the appropriate penalty to be imposed on the Respondent for the two violations.

Any issues raised in the proceedings or hearing of this case but not addressed in this Final Decision are deemed denied pursuant to ALJD Rule 29(B).

Without objection, the Department placed into the record six exhibits, as follows:

1. Final Department Determination and Violation Report for the June 14, 1996

alleged violation.

2. Final Department Determination and Violation Report for the October 4, 1996

alleged violation.

3. Request for a Hearing.

4. Violation Disposition Record.

5. Respondent's Response to the Department's Request for Admissions.

6. S. C. Revenue Procedure # 95-7.

Also, the Respondent placed into evidence, over objection of the Department, a sign-in sheet from the location.

FINDINGS OF FACT

Having observed the witnesses and reviewed the 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. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and subject matter of the hearing was timely given to both parties.

3. Gwendolyn N. Paul holds a sale and consumption (mini-bottle) license for the lounge known as the Blind Horse Saloon located at 1035 Lowndes Hill Road, Greenville, South Carolina. The Blind Horse Saloon is a private club and nonprofit organization. Ms. Paul is its President.

Violation of June 14, 1996

4. On June 14, 1996, Brunson A. Asbill, an agent with the State Law Enforcement Division ("SLED") assigned to its alcohol enforcement division, went to the Blind Horse Saloon to conduct an investigation. SLED had received two complaints from other private clubs that Respondent was selling alcoholic beverages to non-members. Mr. Asbill is a resident of Greenville, South Carolina and is the SLED agent primarily responsible for alcoholic beverage enforcement in the Greenville area.

5. Agent Asbill entered through the front door of the location. He stood in a line with other individuals who were waiting to be checked to determine if they were members or guests of members. Some of these individuals were guests of members and some were members.

6. Betty Wells, the front door person at the location since its opening on December 8, 1995, was on duty that evening and asked Agent Asbill if he was a member. He told Ms. Wells that he was not a member at the location.

7. Standing in line ahead of Agent Asbill was a member of the club who was checking in numerous guests. When Agent Asbill told Ms. Wells he was not a member, she believed he was not a member. However, she immediately formed the mistaken belief that he was a part of the group

of guests brought into the club by the member standing in the line ahead of him. Agent Asbill never told Ms. Wells that he was not a guest nor did he request membership in the club.

8. I find that Ms. Wells honestly believed that Agent Asbill was a guest of the member standing ahead of him at the time he was questioned about his membership status by Ms. Wells.

9. Agent Asbill signed the register as a guest and walked over to the bar. Once there, he ordered a Jack Daniels and coke (mixed alcoholic beverage) drink from the bartender. He paid three dollars and seventy-five cents for the drink and sipped a small portion of it.

10. Two other SLED agents were inside the location at the same time. However, they were not a part of the investigation being conducted by Agent Asbill.

11. After sipping a portion of the mixed drink, Agent Asbill alerted the front door person and subsequently the manager that he had entered as a non-member and not as a guest of a member. He then proceeded to write an administrative citation against the liquor license for a violation of Regs. 7-17 (J) for permitting a non-member to consume liquor on the premises.

Violation of October 4, 1996

12. Audra Shelton Lacatena is an employee of John Paul's Armadillo Restaurant in Greenville, South Carolina. Mr. Paul is the husband of the Respondent. On the evening of October 3, 1996, Ms. Lacatena waitressed at his restaurant.

13. During that evening, during conversations with some of her customers, Ms. Lacatena learned that several of them might be interested in going to the Blind Horse Saloon later that night. Since she is a member there, she offered to let them go into the club as her guest after she got off work.

14. Ms. Lacatena left work at 10:00 p.m., or shortly thereafter. She went to the Blind Horse Saloon. Her husband, Steve Lacatena, is the manager of the club.

15. Shortly past midnight on October 4, 1996, Aaron Jackson, an agent employed by SLED and assigned to its alcohol enforcement division, entered the location. The purpose of his visit was to check the club to ensure it was only allowing members or guests of members to use its facilities and purchase alcoholic beverages or mixed drinks.

16. Agent Jackson, upon entering, walked over to the front desk. He was asked by the front doorperson if he was a member. He answered that he was not. Ms. Lacatena, who was standing beside the front doorperson, thought he was one of the customers she had waited on earlier that evening at John Paul's Armadillo Restaurant. She immediately told Agent Jackson he could go inside the club and that she would sign him in as her guest. He signed the register and went into the club. The register reflects that he was a guest of "A. Lacatena."

17. Mr. Jackson went to the bar, ordered a "crown and cola" (alcoholic beverage) from the bartender. He paid for it and drank a small portion.

18. Subsequently, Agent Jackson approached the manager, Steve Lacatena. He told him that he was not a member nor a guest of a member. He then proceeded to write an administrative violation of Regs. 7-17 (J) against the license of Respondent.

19. Agent Jackson was treated courteously by management. Further, Mr. Lacatena was cooperative and apologized for the incident.

20. Agent Jackson has never received any complaints that this location has served alcoholic beverages to non-members.

21. Off-duty police officers frequent the location and have been seen there by Agent Asbill during his routine inspections.

22. Management has always been cooperative with alcohol enforcement agents when they have conducted their routine inspections.

23. The location has been routinely checked by alcohol enforcement officers for violations of the Alcoholic Beverage Control Act and its regulations since the incident on October 4, 1996. No administrative violations have been written against the license of Respondent since that date.

24. An administrative violation was written against the licensee, Gwendolyn N. Paul, on January 4, 1996, for "permitting consumption of liquor by non-member" at this same location. Respondent paid a monetary penalty of $400.00 on January 19, 1996 for that violation.

25. The October 4, 1996 violation constitutes the third violation written against the license of the Respondent since January 4, 1996.

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) and S.C. Code Ann. § 61-2-260 (Supp. 1996) grant jurisdiction to the Administrative Law Judge Division to hear contested cases arising under the provisions of Title 61 pursuant to the Administrative Procedures Act.

2. Blind Horse Saloon, Inc., operates as a private nonprofit club and organization with a limited membership. It is not open to the general public; it serves alcoholic beverages solely to its members and their guests pursuant to S.C. Code Ann. § 61-6-1600 (Supp. 1996).

3. 23 S.C. Code Ann. Regs. 7-17(J) (1976) 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. All regulations promulgated by the Commission (now Department), effective on the date of the passage 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.

5. 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).

6. 23 S.C. Code Ann. Regs. 7-2(I) (1976) provides that the liability for any penalty is to be imposed upon both the non-profit corporation (private club) and the named individual (licensee).

7. The evidence of record shows that the Respondent, Blind Horse Saloon, through its employees, permitted the purchase and consumption of liquor in the form of mixed drinks by two nonmembers, SLED Agents Asbill and Jackson. They were neither members nor guests of a bona fide member.

8. Permits and licenses issued by the State 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 this State 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).

9. Accordingly, based upon the evidence, I conclude that the Respondent and/or its agents/employees, for whose action Respondent is responsible, violated 23 S.C. Code Ann. Regs. 7-17(J) (1976) both on June 14 and October 4, 1996, by permitting the consumption of liquor by nonmembers.

10. S.C. Code Ann. Section 61-6-2600 (Supp. 1996) provides, for the third violation of a provision of Article 5 of Title 61, a person shall be fined not less than five hundred ($500.00) dollars and have his license revoked permanently.

11. Pursuant to the provisions of S.C. Code Ann. § 61-6-4270 (Supp. 1996), a monetary

penalty may be imposed as an alternative to revocation or suspension in all cases in which revocation or suspension is authorized. Payment of the monetary fine may be suspended in the discretion of the court.

13. The fact-finder in a case has the authority to impose a penalty consistent with the facts presented. Walker v. S.C. ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991). Mitigating circumstances exist in this case which require this court to impose as an alternative to revocation of the license a monetary penalty commensurate with the acts involved. Although Respondent, through its agents, acted negligently on both June 14 and October 4, 1996 in allowing agents of SLED to enter the club, purchase alcoholic beverages and drink portions of them, I do not conclude that such acts were intentional. Further, since the latter incident which occurred over fourteen (14) months ago, no incidents have taken place nor have any additional administrative violations been written against the licensee.

14. Accordingly, based upon the evidence presented, I conclude that a monetary penalty in the amount of one thousand five hundred ($1,500.00) dollars is appropriate under the circumstances of this case.

ORDER

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

ORDERED that Respondent, Gwendolyn N. Paul, d/b/a Blind Horse Saloon, shall pay a monetary penalty in the amount of one thousand five hundred ($1,500.00) dollars to the Department within fifteen days of the date of this order for the violations of 23 S.C. Code Ann. Regs. 7-17(J) (1976) as enumerated herein. If the Department is not in timely receipt of the fine, any agent of the State Law Enforcement Division may serve a copy of this Order on Respondent and shall take possession of the sales and consumption license issued to Respondent at the location. Said agent shall hold the permit for thirty (30) days. Upon expiration of the thirty (30) day suspension, said agent shall return the permit to Respondent. During the period of this suspension, Respondent is ordered to post a copy of this Order at a visible location at the place of business, and to cease and desist all sales of liquor.

AND IT IS SO ORDERED.

_____________________________________

Marvin F. Kittrell

Chief Judge

December 15, 1997

Columbia, South Carolina