SC Administrative Law Court Decisions

The South Carolina Department of Revenue (DOR) seeks a fine of $800 for an alleged failure to comply with statutes prohibiting the sale of beer at a discount price after 8:00 p.m. Anthony W. DeVaux, d/b/a C J's Plaza Club (DeVaux) opposes DOR's position and asserts the sale was proper, and that if improper the fine is excessive. DeVaux's disagreement with DOR's determination places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. § 61-2-260 (Supp. 1997); S.C. Code Ann. § 1-23-310 et. seq. (Supp. 1997). The hearing in this matter was held January 21, 1998 at the Edgar Brown Building, Columbia, South Carolina. Based upon the evidence and the arguments presented by the parties, a violation occurred and a fine of $800 is proper.

1. Did DeVaux advertise, sell, or dispense beer for a price or at a time prohibited by applicable statutes?

2. If a violation occurred, what is the appropriate penalty in light of the facts of this case?

1. Positions of Parties

DOR asserts DeVaux made a discounted sale of beer at 10:15 p.m. in violation of the statutes which prohibit such sales after 8:00 p.m. DeVaux disagrees and argues that at 10:15 p.m. he sold a card and not beer. DeVaux asserts no prohibited sale of beer takes place since the holder of the card only buys the right to receive up to 10 beers at sometime in the future. Further, he argues he is selling a "10 pack" for which a discount is proper.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

a. General

1. DeVaux holds an on-premises beer and wine permit identified as BW 842852 used at DeVaux's location of 7468 Edmund Highway, Pelion, South Carolina.
2. DeVaux advertises and sells beer for the regular price of $ 1.50 per single beer.
3. On December 5, 1996, S.C. Law Enforcement (SLED) Agents entered the location to perform an inspection.

b. Purchase

1. Upon entering, the SLED Agents purchased a card from an employee of DeVaux's for a price of $10.00.
2. The card contained numbers from one through ten and entitled the holder to receive 10 beer beverages at any time the location was open.
3. After purchasing the card, the SLED Agent asked to use the card to acquire two beers.
4. DeVaux's employee marked through number 1 and number 2 on the card, returned the marked card to the SLED Agent, and gave the Agent two beers.
5. The regular price for a single beer is $ 1.50.
6. The use of the card allows an effective purchase price of $1.00 for a single beer.
7. The use of the card produces a discount of $ .50 per single beer.
8. The $10 was paid to DeVaux's employee by the SLED Agent at approximately 10:15 p.m.
9. The card was used to acquire two beers at approximately 10:15 p.m.
10. The remaining eight beers were held by the seller solely at the request of the buyer and, under the terms of the contract, were available at any time to the SLED Agent.
11. At the time of the payment of $10 by the SLED Agent to DeVaux's employee, nothing remained to be done by either party to complete the sale.

3. Discussion

a. Applicable Law

A person operating under an on-premises beer and wine permit may not advertise, sell, or dispense such beverages for a discounted price except under limited conditions. For example, except for limited circumstances concerning individual consumption, fraternal organizations, and private functions, the price charged for beer and wine cannot be less than one-half of the regularly charged price, cannot be a price based on two-or-more for the price of one, and the transfer cannot be for free. S.C. Code Ann. § 61-4-160 (Supp. 1997). Further, even when a discounted price is proper, the price discount can only be granted for sales from 4:00 p.m. until 8:00 p.m. Id.

b. Application To Facts

Here, DeVaux holds an on-premises beer and wine permit identified as BW 842852 used at DeVaux's location of 7468 Edmund Highway, Pelion, South Carolina. No dispute exists that DeVaux sells beer for the regular price of $ 1.50 per single beer. On December 5, 1996, a S.C. Law Enforcement (SLED) Agent entered the location and paid $10.00 to DeVaux's employee which allowed the holder to receive a card permitting receipt of 10 beers at any time the location was open. The card produces an effective price of $1.00 per single beer. Thus, the evidence establishes that the difference between the regular price of $1.50 per single beer and the card's effective price of $1.00 per single beer gives a discount of $ .50 per single beer. Accordingly, if the discount is given at a time after 8:00 p.m., DeVaux is in violation of the statute.

DeVaux argues that he did not provide a discount after 8:00 p.m. since he did not sell beer at 10:15 p.m. Rather, he sold a card which entitled the holder to 10 beers at some future date. In his view, the sale of the card must be separated from the transfer of the beer to the customer. Accordingly, under DeVaux's theory, the sale of the card is a finished event. No beer is transferred at that sale (i.e., only a card is sold) and the prohibition on discounted sales is inapplicable since the prohibition governs only the sale of beer and not the sale of cards. Further, when the customer uses the card to receive a beer, DeVaux argues the prohibition is again inapplicable. DeVaux asserts no beer is sold when the card is presented, but rather a beer is provided based upon DeVaux's promise to provide up to 10 beers when the card is presented. I cannot agree with DeVaux's analysis.

First, under the facts here, the $10 payment is actually a prepayment for 10 beers. A prepayment is a current expenditure for a future benefit. Black's Law Dictionary, at 1182 (6th ed. 1990). Here, the future benefit received from the prepaid expenditure is the customer's right to receive a beer (up to a limit of 10) whenever the customer desires. The card itself is not sold. Rather, the card accomplishes two purposes. First, the card is the customer's receipt for the prepayment of 10 beers. Second, the card is the means for tracking how many beers the customer has received. Accordingly, the payment of the $10 for the card is a sale of beer at the time of the payment.⁽¹⁾ Since the sale is complete, DeVaux sold beer at a discount at 10:15 p.m., a time after 8:00 p.m., and thus violated S.C. Code Ann. § 61-4-160 (Supp. 1997).

Further, and in any event, the card mechanism is improper since the card may be used to receive a beer at any time. Thus, DeVaux may dispense a beer to a cardholder for a discounted price of $1.00 at any time of day or night and thereby violate the statutory prohibitions. In fact, in the case here, the card was used to acquire two beers at 10:15 p.m. Providing a beer at 10:15 p.m. for the discounted price of $1.00 is beyond the allowable time of 8:00 p.m. Accordingly, while DeVaux may properly provide beer to customers at the $1.00 discounted price, he may not "sell" the card at any time other than between 4:00 p.m. and 8:00 p.m.⁽²⁾ Further, the card may not be used to acquire a beer at any time other than between the hours of 4:00 p.m. and 8:00 p.m. In this case, a violation of S.C. Code Ann. § 61-4-160 (Supp. 1997) was committed by DeVaux on December 5, 1996 at 7468 Edmund Highway, Pelion, South Carolina.

4. Conclusions of Law

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. A person operating under a on-premises beer and wine permit may not advertise, sell, or dispense such beverages for a discounted price except under limited conditions. S.C. Code Ann. § 61-4-160 (Supp. 1997).

2. Except for limited circumstances concerning individual consumption, fraternal organizations, and private functions, the price charged cannot be less than one-half of the regularly charged price, cannot be a price based on two-or-more for the price of one, and the transfer cannot be for free. S.C. Code Ann. § 61-4-160 (Supp. 1997).

3. Even when a discounted price is proper, the discount can be granted only from 4:00 p.m. until 8:00 p.m. S.C. Code Ann. § 61-4-160 (Supp. 1997).

4. Delivery is a required element of a sale. 77A C.J.S. Sales § 172 (1994).

5. Where possession of goods such as beer remains in the seller solely at the request of the buyer and nothing remains to be done by either party, delivery is constructively completed. 77A C.J.S. Sales § 173 (1994).

6. DeVaux's employee sold beer to the SLED Agent on December 5, 1996 at 10:15 p.m. at a discount of $ .50 per single beer with such sale violating the price restrictions for the sale of beer under DeVaux's on-premises beer and wine permit. S.C. Code Ann. § 61-4-160 (Supp. 1997).

1. Positions of Parties

DOR asserts an $800 penalty is warranted since the current violation is the second within the last three years. DeVaux argues the fine is excessive since the discounted sales law is confusing and that any violation was unintentional.

2. Findings of Fact

Based on the preponderance of the evidence, the following findings of fact are entered:

a. General

1. DeVaux holds an on-premises beer and wine permit identified as BW 842852 used at DeVaux's location of 7468 Edmund Highway, Pelion, South Carolina.

2. On January 31, 1996, DeVaux was cited for violating 23 S.C. Code Ann. Regs. 7-9(B), permitting the purchase of a beer by a person under twenty-one.

3. DeVaux paid a $400 fine as the result of the January 31, 1996 violation.

4. On December 5, 1996, DeVaux was cited for violating S.C. Code Ann. § 61-4-160 (Supp. 1997).

5. Pursuant to this order, DeVaux is found to have violated § 61-4-160 (Supp. 1997).

6. The current violation is the second violation within three years.

7. For anyone with a beer and wine permit who commits a second violation within three years, DOR uniformly seeks a penalty of $800.

8. A penalty of $800 is reasonable in this matter.

3. Discussion

For violations of the beer and wine provisions of Chapter 4 of Title 61, in lieu of suspension or revocation, a penalty may be imposed upon the holder of the beer or wine permit with the amount of the penalty being within a range of twenty-five dollars to one thousand dollars. S.C. Code Ann. § 61-4-250(1) (Supp. 1997). When challenged, the amount of the penalty must be determined after a hearing as provided in the South Carolina Revenue Procedures Act and the Administrative Procedures Act. Id.

Repeated violations within a relatively short period of time form a basis for increasing the amount of a penalty for each subsequent violation. Here, a second violation of the beer and wine statutes has occurred within a three year period. Accordingly, an $800 penalty is proper.

4. Conclusions of Law

Based upon the above Findings of Fact, I conclude as a matter of law, the following:

1. For violations of the beer and wine provisions of Chapter 4 of Title 61, in lieu of suspension or revocation, a penalty may be imposed upon the holder of the beer or wine permit with the amount of the penalty being within a range of twenty-five dollars and one thousand dollars. S.C. Code Ann. § 61-4-250(1) (Supp. 1997).

2. When challenged, the amount of the penalty must be determined after a hearing as provided in the South Carolina Revenue Procedures Act and the Administrative Procedures Act. S.C. Code Ann. § 61-4-250(1) (Supp. 1997).

3. Repeated violations within a relatively short period of time form a basis for increasing the amount of a penalty for each subsequent violation.

4. An $800 penalty is proper for a second violation of the statutes where the second violation occurred within a three year period.

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

Anthony W. DeVaux, d/b/a C J's Plaza Club, having violated the discounted prices provisions governing the use of his on-premises beer and wine permit, is liable for a penalty of $800.

AND IT IS SO ORDERED.

RAY N. STEVENS

Administrative Law Judge

Dated: January 30, 1998

Columbia, South Carolina

1. I acknowledge that delivery is a required element of a sale. 77A C.J.S. Sales § 172 (1994). However, the fact that the customer does not take immediate delivery of the beer at the time the $10 is paid does not prevent the sale from being complete. Rather, delivery may be either actual or constructive. Where, as is the case here, possession remains in the seller solely at the request of the buyer and nothing remains to be done by either party, delivery is constructively completed. 77A C.J.S. Sales § 173 (1994).

2. I recognize that DOR stated in its presentation that it did not object to DeVaux selling the card at hours other than 4:00 p.m. through 8:00 p.m. The manner in which DOR enforces the law is a matter within that agency's discretion. I merely point out that DeVaux's practices produce a completed sale at the time the $10 is paid. The statute regulates both the sale as well as the dispensing of the beer. Thus, the fact that the beer is dispensed (i.e., the card is redeemed) at a time other than when the beer is sold (i.e, when the card is "purchased") does not exempt the sale from the time limitations of the statute.