SC Administrative Law Court Decisions

This matter comes before the Administrative Law Judge Division on a citation issued by the South Carolina Department of Revenue ("DOR") against Ken Newman, d/b/a Horse and Cart Cafe for an administrative violation of S.C. Code Ann. § 61-4-580(5) (Supp. 1997), which prohibits any permittee or its agent from knowingly permitting an act that constitutes a crime in South Carolina. Respondent is accused of violating S.C. Code Ann. § 16-17-500, which prohibits selling, furnishing, giving, or providing cigarettes to anyone under the age of eighteen. DOR seeks a fine of $800 against Respondent. After notice to the parties, a hearing was held on September 23, 1998 in Charleston, South Carolina. Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(C).

I make the following Findings of Fact, taking into account the burden on the parties to establish their respective cases by a preponderance of the evidence and taking into consideration the credibility of the witnesses:

1. Ken Newman holds Beer and Wine Permit No. 832675 on behalf of the Horse and Cart Cafe at 347 King Street in Charleston ("Cafe").
2. On July 18, 1997, an underage cooperating individual ("UCI") entered the Cafe.
3. While inside the Cafe, the UCI asked Charlene Carter, ("Carter") if she could purchase a package of Newport cigarettes.
4. At the time of the events in question, Carter was an employee and agent of the Cafe.
5. Carter told the UCI that a cigarette machine was located in the back of the Cafe.
6. There is some dispute about whether the UCI was told to check the cigarette machine to determine whether it was out of order. This dispute in the testimony does not need to be resolved for purposes of determining whether a violation occurred.
7. The cigarette machine was located near the rear of the Cafe in a hallway accessing the pool tables. Signs leading to this area state that access is restricted to persons eighteen years of age or older.
8. The area where the cigarette machine was located was not open at the time the UCI purchased the cigarettes. Access to this area was not restricted by any physical barriers. No lights were on in this area.
9. The UCI requested change for the cigarette machine from Carter, who gave her the change.
10. The UCI went to the cigarette machine in the back of the Cafe and purchased a box of Newport cigarettes.
11. At no time during the events in question did Carter ask the UCI for identification to establish her age.
12. Thereafter, an officer of the Charleston Police Department issued a ticket to Ms. Carter for a violation of Section 16-17-500 for the sale of cigarettes to a person under eighteen.
13. Ms. Carter was convicted of violating Section 16-17-500 on July 23, 1997.
14. On July 29, 1997, an agent of the State Law Enforcement Division issued a citation against Ken Newman for permitting a criminal act as a result of the events of July 18, 1997.
15. Newman was previously cited on December 20, 1996 for violating S.C. Code Ann. § 61-5-20(4) and S.C. Code Ann. Regs. 7-86, which prohibit the sale or delivery of beer or liquor during restricted hours. Respondent paid a $400 fine.

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

1. Subject matter jurisdiction is vested in the Administrative Law Judge Division pursuant to S.C. Code Ann. § 12-60-30(4)(a) (Supp. 1997) with the hearing held under S.C. Code Ann. §§ 1-23-600(B) and 1-23-310 (Supp. 1997).
2. Permits and licenses issued by this state for the sale of liquor, beer and wine are privileges to be used and enjoyed only so long as the holder complies with the restrictions and conditions governing them. See Feldman v. S.C. Tax Commission, 203 S.C. 49, 26 S.E.2d 22 (1943).
3. Employees of beer and wine permit holders are forbidden from permitting "any act, the commission of which tends to create a public nuisance or which constitutes a crime. . . ." S.C. Code Ann. § 61-4-580(5) (Supp. 1997).
4. At the time of the events in question, Carter was an "employee" of the Cafe as that term is used in S.C. Code Ann. § 61-4-580(5) (Supp. 1997).
5. "It is unlawful for any person to sell, furnish, give, or provide any minor under the age of eighteen years with cigarettes. . . . Any person violating the provisions of this section, either in person, by agent or in any other way, shall be guilty of a misdemeanor. . . ." S.C. Code Ann. § 16-17-500 (Supp. 1997).
6. DOR asserts the affirmative in this case; therefore, it must prove by a preponderance of the evidence that Respondent violated Section 61-4-580(5). See 29 Am. Jur. 2d Evidence § 127 (1994); Alex Sanders et al., South Carolina Trial Handbook § 9:3 (1994).
7. Pursuant to S.C. Code Ann. § 61-6-4090 (Supp. 1997), "if a permittee or licensee, or servant, agent, or employee of the permittee or licensee . . .is convicted of a criminal offense which occurred on the licensed premises, the conviction or plea constitutes proof that the offense occurred and the record thereof is admissible in a contested case hearing before the administrative law judge division."
8. The trier of fact must weigh and pass upon the credibility of evidence presented. See S.C. Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge who observes a witness is in the best position to judge the witness's demeanor and veracity and evaluate their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Mann v. Walker, 285 S.C. 194, 328 S.E.2d (Ct. App. 1985).
9. DOR has met its burden of proof by a preponderance of the evidence in showing that Respondent's clerk knowingly sold, furnished, gave or provided a minor under the age of eighteen with cigarettes.
10. For any violation of Chapter 4, S.C. Code Ann. § 61-4-250 (Supp.1997) authorizes the imposition of a monetary penalty not less than twenty-five dollars and not more than $1,000.
11. The Department, through Revenue Procedure 95-7, has established penalty guidelines for violations of "ABC" laws. These guidelines provide that the appropriate penalty to be imposed on a retail beer and wine permittee who commits a second offense within a three year period is $800.
12. The fact finder has the authority to impose an administrative penalty after the parties have had an opportunity to be heard. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991).
13. Respondent challenges the penalty on the basis that he had no knowledge that Ms. Carter committed the offense or was convicted of the offense until he received the violation report from the State Law Enforcement Division. He also argues that the imposition of an $800 fine would create a hardship upon Ms. Carter who, according to the Cafe's policy, must pay the fine.
14. Neither the Department nor this Division is responsible for the policy of the Cafe which seeks to recoup the fine from its employee. Under the statutory provisions, the permittee is responsible for the payment of any penalties imposed for a violation of the statutory or regulatory provisions. In addition, the permittee is responsible for all acts of his servants, agents, or employees and cannot seek to avoid the consequences of a violation for lack of personal knowledge. "A principal is affected with constructive knowledge of all material facts of which its agent receives notice while acting within the scope of his authority." South Carolina Law Enforcement Div. v. The "Michael and Lance", 281 S.C. 339, 341, 315 S.E.2d 171, 173 (S.C.App. 1984), citing Crystal Ice Co. of Columbia, Inc. v. First Colonial Corp., 273 S.C. 306, 257 S.E.2d 496 (1979).
15. Under the facts and circumstances of this case, the penalty imposed by the Department is appropriate.

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

ORDERED, that Ken Newman d/b/a Horse and Cart Cafe has violated the provisions of S.C. Code Ann. § 61-4-580 by permitting a criminal act (sale of cigarettes to a person under eighteen years of age - Section 16-17-500) and is fined $800 to be remitted to the Department of Revenue.

AND IT IS SO ORDERED.

__________________________________

ALISON RENEE LEE

Administrative Law Judge

October 9, 1998

Columbia, South Carolina