South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Susie M. Straka, DLP, d/b/a Tail Spin (DOR)

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Susie M. Straka, DLP, d/b/a Tail Spin (DOR)

Case #54-99-0305
 
DOCKET NUMBER:
99-ALJ-17-0561-CC

APPEARANCES:
Jeffrey M. Nelson, Esquire, for Petitioner

Leigh J. Leventis, Esquire, and Robert E. Kneece, Jr.,

Esquire, for Respondent
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE



These matters come before the Administrative Law Judge Division (Division) pursuant to §§ 61-2-20 (Supp. 1999) (entitled "Administration and Enforcement") and 61-6-1600 (Supp. 1999) (entitled "Nonprofit Organizations") and 23 S.C. Code Ann. Regs. 7-86 (Supp. 1999) (entitled "Facie Evidence of Sale") and 23 S.C. Code Ann. Regs. 7-17 (Supp. 1999) (entitled "Sale and Consumption at Nonprofit Organizations"). The Respondent Susie M. Straka is the holder of beer and wine license number BW 76017 for the sale and consumption of beer and wine at Tail Spin, a nonprofit organization located at 115 Overland Drive, West Columbia, South Carolina. Ms. Straka is also the holder of license number SC 76018 for the sale and consumption of alcoholic liquors at the same location.

The Respondent is accused of permitting the sale and delivery of beer and liquor during restricted hours and of permitting the consumption of liquor by a non-member on the premises of a private club/nonprofit organization. As to the beer and wine permit, the Department contends that this is the Respondent's first violation. For that charge, under S.C. Revenue Procedure 95-7, the Department is seeking a fine in the amount of Four Hundred ($400.00) Dollars. As to the license for the sale and consumption of alcoholic liquors, the Department asserts that the two violations charged herein are the third and fourth violations of the Respondent within the past three years.(1) Under S.C. Revenue Procedure 95-7, the Department is seeking a fine of Five Hundred ($500.00) Dollars for the third violation and revocation of the Respondent's retail sale and consumption license for the fourth violation. Although these cases were not formally consolidated, the hearings into these matters were held simultaneously at the Division on February 8, 2000 at 10:00 a.m., thereby leading to the issuance of one Final Order and Decision.

FINDINGS OF FACT

Having observed the witnesses and 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. Notice of the time, date, place and subject matter of the hearing was given to the Petitioner and the Respondent.

2. Susie M. Straka, d/b/a Tail Spin, holds beer and wine license number BW 76017 and sale and consumption license number SC 76018. Tail Spin is a nonprofit organization.

3. On February 18, 1999, Special Agent William Cox of the State Law Enforcement Division (SLED) entered Tail Spin by paying a fee of Five ($5.00) Dollars to an employee at the entrance of the establishment. While at the door, Agent Cox also signed a list under the heading "member" even though he was not a member of Tail Spin. While in Tail Spin, Agent Cox purchased a mixed liquor drink from the bartender. Shortly after he purchased the drink, two additional SLED agents entered the establishment and informed the bartender that a violation report was going to be issued to Tail Spin for permitting the consumption of liquor by a non-member, contrary to 23 S.C. Code Ann. Regs. 7-17(J) (Supp. 1999). The Department asserts that this is Tail Spin's third violation.

4. The list Agent Cox signed had two columns with the separate headings "member" and "guest." Agent Cox could not recall if he was asked if he was a member although he signed the list under the heading "member." However, it is standard SLED procedure that an undercover agent will not say he is a member if he is not a member.

5. On Sunday, February 21, 1999, at approximately 2:20 a.m., SLED Special Agent Richard Gregory, a bona fide member of the club, entered Tail Spin and purchased a Budweiser beer from the bartender. Agent Gregory then purchased a mixed liquor drink. Shortly after he purchased both beverages, two additional SLED agents entered the establishment and informed the bartender that a violation report was going to be issued to Tail Spin for permitting the sale and delivery of beer and liquor during restricted hours, as prohibited by S.C. Code Ann. § 61-6-1600 (Supp. 1999) and 23 S.C. Code Regs. 7-86 (Supp. 1999). After the issuance of the violations, the SLED agents obtained a beer bond in the amount of Nine Hundred Fifty-Six ($956.00) Dollars for the beer that was on the premises of Tail Spin at the time of the beer and wine violation. The Department contends that the after hours sale of the mixed drink is the fourth violation against the Respondent's retail sale and consumption license, whereas the beer sale was the first violation against the Respondent's beer and wine permit.

6. Agent Cox's signing as a member could have created the appearance that he was a "member" of this private club at the alleged February 18, 1999 violation, Therefore, under the circumstances of this case, I find that the evidence was insufficient to establish a violation of 23 S.C. Code Ann. Regs. 7-17(J) (Supp. 1999) (consumption of liquor by a non-member). Nonetheless, I find that on February 21, 1999, the Respondent violated S.C. Code Ann. § 61-6-1600 (Supp. 1999) and 23 S.C. Code Ann. Regs. 7-86 (Supp. 1999) by allowing consumption of both beer and liquor during restricted hours. These unlawful sales were a third violation against the Respondent's retail and consumption license and the first violation against the Respondent's beer and wine permit . It is unnerving to this Court that though the February 18, 1999 incident does not establish proof of a violation, the Respondent did not heed the issuance of the Department's violation and improve the operation of this business. I, therefore, find that the appropriate penalty in this case is suspension of the Respondent's retail sale and consumption license for a period of forty-five (45) days. I further find that the appropriate penalty for the violation involving the Respondent's beer and wine permit is a fine in the amount of Four Hundred ($400.00) Dollars.



CONCLUSIONS OF LAW

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

1. S.C. Code Ann. § 1-23-600 (Supp. 1999) grants jurisdiction to the Administrative Law Judge Division to hear contested cases under the Administrative Procedures Act.

2. S.C. Code Ann. § 61-2-20 (Supp. 1999), sets forth:

The functions, duties, and powers set forth in this title are vested in the department and the division. The department must administer the provisions of this title, and the division must enforce the provisions of this title.

3. S.C. Code Ann. § 61-2-260 (Supp. 1999) grants the ALJ Division the authority to hear contested case hearings in matters governing alcoholic beverages, beer and wine.

4. S.C. Code Ann. § 61-6-1600 (Supp. 1999), entitled "Nonprofit organizations," sets forth the following:

Nonprofit organizations which are licensed by the department under this article may sell alcoholic liquors in minibottles. Members or guests of members of these organizations may consume alcoholic liquors sold in minibottles upon the premises between the hours of ten o'clock in the morning and two o'clock the following morning.

Likewise, 23 S.C. Code Ann. Regs. 7-86 (Supp. 1999) sets forth:

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.



5. Only bona fide members and bona fide guests of members of such organizations may consume alcoholic beverages sold in sealed containers of two ounces or less upon the licensed premises. 23 S.C. Code Ann. Regs. 7-17(J) (Supp. 1999).

6. 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).

7. 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 to 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).

8. 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 an 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 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).

Prior to governmental restructuring, a commission, sitting in its adjudicatory capacity, imposed penalties for violations of statutory provisions administered by the commission's subordinate agency. In its capacity as the fact-finder, the Tax Commission would conduct an adjudicatory hearing in all contested cases arising under Title 12 of the South Carolina Code, and would render an order containing findings of fact and conclusions of law. As the fact-finder, it was the commission's prerogative "to impose the appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E. 2d 633, 634 (1991). With the advent of restructuring and the abolition of the Tax Commission, however, the Administrative Law Judge Division was given the authority to hear "all contested cases, as defined by Section 1-23-310 and as previously considered by the three [Tax] commissioners. . . ." S.C. Code Ann. Section 12-4-30(D) (Supp. 1999). The Administrative Law Judge, as the current fact-finder, must also impose a penalty based on the facts presented at the contested case hearing. Parties are entitled to present evidence on all issues arising out of the contested agency action and the tribunal responsible for conducting the contested case proceedings has the authority to decide the issues based on the facts presented, and make the final decisions on all the issues, including the appropriate penalty.

9. Under the Offenses and Penalty Guidelines in Revenue Procedure 95-7, the penalty for a first offense against a beer and wine retail permit is a fine of Four Hundred ($400.00) Dollars. The penalty for a third offense against a retail sale and consumption license is a Five Hundred ($500.00) Dollar fine and revocation of the license. These are the penalties the Department is seeking against the Respondent. Revenue Procedure 95-7 sets forth that it is only a guideline and does not establish a binding norm.



ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law,

IT IS HEREBY ORDERED that the retail sale and consumption license of the Respondent, Susie M. Straka, DLP, d/b/a Tail Spin, is hereby suspended for a period of forty-five (45) days.

IT IS FURTHER ORDERED that the Respondent shall pay a fine to the Department in the amount of Four Hundred ($400.00) Dollars for the violation involving the Respondent's beer and wine permit.

AND IT IS SO ORDERED.



_____________________________

Ralph King Anderson, III

Administrative Law Judge



April 14, 2000

Columbia, South Carolina

1. The Department presented evidence at the hearing that the Respondent's previous violations occurred on October 1, 1999 and December 10, 1999. The Respondent did not appeal the issuance of those violations.


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