ORDERS:
FINAL ORDER AND DECISION
I. Statement of the Case
The South Carolina Department of Revenue (DOR) seeks a $500 fine and the revocation of a sale
and consumption (minibottle) license against Respondent, Kela M. Wood (Wood) for violation of
S.C. Code Ann. § 61-66-1600 (Supp. 1998). Wood opposes DOR's position and asserts a fine may
be warranted but a revocation is inappropriate. Wood's disagreement with DOR's determination
places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. § 61-2-260
(Supp. 1998); S.C. Code Ann. § 1-23-310 et. seq. (Rev. 1986 and Supp. 1998). The hearing in this
matter was held June 14, 1999 at the Edgar Brown Building, Columbia, South Carolina. Based upon
the evidence and the arguments presented by the parties, both a $500 fine and the revocation of
Wood's license is imposed.
II. Issues
1. Did Wood violate S.C. Code Ann. § 61-6-1600 (Supp. 1998) by selling minibottles to an
individual who was not a member of the licensed private club or a guest of a member, and
did Wood violate 23 S.C. Code Ann. Regs. 7-17(J) (Supp. 1976) by allowing an individual
who was not a member of the private club or a guest of a member to consume alcoholic
beverages sold in sealed containers of two ounces or less upon the licensed premises?
2. If Wood did violate S.C. Code Ann. § 61-6-1600 (Supp. 1998) and 23 S.C. Code Ann. Regs.
7-17(J) (Supp. 1976), what is the appropriate penalty?
III. Analysis
A. Sale to Non-Member
1. Positions of Parties
DOR argues that the private club of Sneekers II sold a mixed alcoholic drink to undercover
personnel who were neither members nor guests of members. Wood argues that while the sale may
have taken place, such was an unintentional violation.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
On Friday, July 24, 1998, a SLED officer operating in an undercover capacity entered the licensed
premises located at 1310 Old Georgia Hwy, Gaffney, South Carolina. No one accompanied the
undercover officer onto the premises of the private club and no member made prior arrangements
with the management to receive the individual as a guest. A member of the club at the entrance
asked the undercover agent to sign in. However, the agent was not asked if he was a member or the
guest of a member. The undercover agent was admitted after paying a $5.00 cover charge.
After entering, the agent approached the bartender and ordered an alcoholic drink consisting of
Crown Royal and Coke. The bartender prepared the alcoholic beverage from a minibottle, served
the drink to the SLED agent, and received from the agent $4.00 in payment. The officer then
consumed a portion of the drink on the premises.
3. Conclusions of Law
A club such as Sneekers II operating as a bona fide nonprofit organization may hold a minibottle
license. S.C. Code Ann. § 61-6-1820 (Supp. 1998). In utilizing that license, however, the club may
sell minibottles only to members or guests of members. S.C. Code Ann. § 61-6-1600 (Supp. 1998).
Further, the licensed premises can be used to consume minibottles only by members and guests of
members. 23 S.C. Code Ann. Regs. 7-17(J). Thus, the SLED Agent must have been either a
member of the club or the guest of a member.
Nothing in the evidence establishes that the agent was a member of the club. Rather, the evidence
demonstrates that the agent held no membership and was not asked about membership when entering
the premises.
As to guests, bona fide guests are limited to those who either accompany a member onto the
premises or those for whom the member has made prior arrangements with the management of the
organization. 23 S.C. Code Ann. Regs. 7-17(K). Clearly, no one accompanied the undercover
officer onto the premises and no prior arrangements had been made with the club's management.
Accordingly, the agent was neither a member nor a guest of a member. Thus, Wood violated S.C.
Code Ann. § 61-6-1600 (Supp. 1998) by selling to a person that was neither a member nor a guest
of a member and violated 23 S.C. Code Ann. Regs. 7-17(J) by allowing that person to consume
minibottles on the licensed premises.
B. Penalty
1. Positions of Parties
DOR argues that the extensiveness of the violations warrants a fine of $500 and a revocation of the
minibottle license. Kela M. Wood argues that a fine may be appropriate but a revocation is not.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
The location here under review has operated with a minibottle license for a number of years. During
that time period at least two corporations and two license holders provided the management for the
private club.
For example, Sneekers II, Inc. (with Wood as President) was created in February 1987 to operate the
location. The minibottle license for the location was held in the name of Ivan Derrell Upchurch,
Vice-President of the corporation. However, for failure to file an annual report and for failure to pay
franchise taxes, the corporation was dissolved in December 1989, but was reinstated in June 1992
by the proper filing and payment of outstanding taxes. The corporation continued operating the
private club until ultimately being dissolved by the filing of Articles of Dissolution effective October
15, 1997.
A second corporation, Sneekers II, was created virtually simultaneously with the dissolution of
Sneekers II, Inc. Sneekers II continued to operate the same private club at the same location as the
first corporation. Indeed, the same two officers from the first corporation continued the management
for the second corporation by merely switching positions. In other words, Wood, the President of
Sneekers II, Inc. became Vice President of Sneekers II, and Upchurch, the Vice-President of
Sneekers II, Inc. became President of Sneekers II. Further, with the approval of DOR, the minibottle
license was transferred to Wood from Upchurch on November 24, 1997.
During the operation of the location several violations occurred. On July 15, 1989, Upchurch was
charged with permitting the consumption of liquor by a non-member. A second violation on the
non-member provision was committed by Upchurch on August 29, 1992. On October 18, 1996,
Upchurch violated the provision prohibiting the possession of liquor by a person under the age of
twenty-one. On March 7, 1998, Wood (having obtained the license on November 24, 1997) violated
the provision prohibiting non-members from consuming liquor on the premises. Finally, the July
24, 1998 violation is yet another violation of the prohibition on providing liquor to non-members.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
A nonprofit organization licensed to sell minibottles is subject to either a suspension or a revocation
of a minibottle license if the license holder violates any provision of the Alcoholic Beverage Control
Act (Act) or any regulation pertaining to that Act. S.C. Code Ann. § 61-6-1830 (Supp. 1998).
However, not all violations of the Act result in a mandatory suspension or revocation since discretion
exists to impose a monetary penalty in lieu of suspension or revocation. S.C. Code Ann. §
61-6-4270 (Supp. 1998).
Where the General Assembly authorizes a range for an administratively imposed penalty, the
administrative adjudicator sitting as the fact-finder may set the amount of the penalty after a hearing
on the dispute. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991).
Since in this case the severity of the penalty is in dispute, the fact-finder must receive evidence and
make a determination on all such factual disputes arising from the contested case. S.C. Code Ann.
§ 1-23-350 (Rev. 1986).
Here, under all of the facts of this case, a $500 fine and a revocation is imposed. In the instant case,
the same location has had repeated violations and warrants a revocation of the license. Since July
15, 1989, the location has had five violations with three of those violations having occurred within
less than a two year period from October 1996 to July 1998. Further, of those five violations, four
are repeat offenses for the same violation of selling to non-members. Thus, a fine and revocation are
proper.
The fact that the location has operated under two different corporate charters does not militate
against revoking the minibottle license in the instant case. Rather, at all times the same license was
held for the location regardless of the name of the corporation that provided management to the
location. That single license was the source of repeated violations and that license is properly
revoked. Although the actual license changed from Upchurch to Wood on November 24, 1997,
Wood was equally responsible for any violations while the license was in the name of Upchurch;
Wood and Upchurch served together as officers of the same nonprofit corporation which initially
qualified the location for minibottle use.
Further, the mere creation of second corporation cannot shield the offending license under the facts
of this case. A party may not use a subterfuge to forestall the proper application of the liquor laws.
See Winter v. Pratt, 258 S.C. 397, 189 S.E.2d 7 (1972) (a subterfuge of a "gift" of liquor was in
reality a disguised sale prompting a finding that the "courts will refuse to countenance any trick or
subterfuge intended to evade the law."). Here, the license holder sought to create a second
corporation and to transfer the license to another name (Wood) as a device to give the appearance
of a "separation" from the prior violations. Such an artifice is unpersuasive since the same officers
operated at the same location with the same license as that used in the first corporation.
IV. Order
Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:
Kela M. Wood is liable for a $500 fine. Further, minibottle license SC924138 utilized at 1310 Old
Georgia Hwy. is revoked as of the eleventh day following the date of this order.
AND IT IS SO ORDERED.
RAY N. STEVENS
Administrative Law Judge
Dated: July 2, 1999
Columbia, South Carolina |