South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Collins Holding Corporation

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Collins Holding Corporation
 
DOCKET NUMBER:
00-ALJ-17-0091-CC

APPEARANCES:
For the Petitioner: Michael K. Kendree, Esquire

For the Respondent: Timothy C. Youmans, Esquire
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE



This is a case brought by Respondent Collins Holding Corporation (Collins) for a contested case hearing pursuant to S.C. Code Ann. §1-23-600 (Supp. 1999) and S.C. Code Ann. §12-4-30 (Supp. 1999). (1) Respondent Collins has appealed the issuance of the South Carolina Department of Revenue's (Department) Final Determination dated January 31, 2000. The Department alleges that Collins violated the provisions of S.C. Code Ann. §12-21-2804(C) (Supp. 1999) by permitting a cash payout to a person under twenty-one (21) years of age on the premises of The Pantry #476 in Chapin, South Carolina. A hearing on this matter was held before me on August 31, 2000 at the offices of the Administrative Law Judge Division (Division) in Columbia, South Carolina.



FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of evidence:

1. Notice of the time, date, place and subject matter of the hearing was timely given to the Petitioner and the Respondent.

2. At the time that the citation was issued, Respondent Collins held South Carolina Type III coin-operated device license numbers 3007573, 3154060, and 3154061. Those licenses were attached to video poker machines owned by the Respondent and being operated at The Pantry #476. In accordance with our Supreme Court's decision in the case of Joytime Distributors and Amusement Co., Inc. vs. The State of South Carolina, 338 S.C. 634, 528 S.E.2d 647 (1999), the three Type III licenses are no longer active as a result of the ban on the operation of Type III coin-operated devices. 3. On October 19, 1999, an employee of The Pantry #476 accepted and cashed a video poker payout ticket from an underage cooperating individual (UCI) working on the behalf of the South Carolina Law Enforcement Division (SLED). As set forth above, the issues related to the allegations against The Pantry #476 were resolved by a Consent Order filed on April 26, 2000.

4. No employee of Respondent Collins was located on the premises of The Pantry #476 and Collins did not maintain or operate the premises on which the payout occurred.



STIPULATIONS OF FACT

Prior to the hearing in this matter, counsel for both parties agreed upon the following Stipulations of Fact:

1. The Pantry #476 is located at 1259 Chapin Road at Amicks Ferry Road, Chapin, South Carolina.

2. Respondent Collins owns the Type III coin-operated devices with Type III coin-operated device licence numbers 3007573 (expiration 2000), 3154060 (expiration 2001), and 3154061 (expiration 2001).

3. On October 19, 1999, the Type III coin-operated devices with the Type III licenses listed above were in use and available for play in The Pantry #476.

4. The person cited with making a video poker payout to underage cooperating informant Sean Buckmon was an employee of The Pantry #476 and not an employee of Collins.

5. After UCI Buckmon exited The Pantry #476, SLED Agent Konni Smith entered the location and issued a Preliminary Findings Report for violation of S.C. Code Ann. § 12-21-2804(C) (Supp. 1999).

6. An Agency Intitial Citation was issued to Respondent Collins on January 4, 2000.

7. Respondent Collins transmitted a protest of the Agency Initial Citation to the Department on January 10, 2000.

8. The Department issued a Final Determination letter on January 31, 2000.

9. Respondent Collins requested a hearing before the Administrative Law Judge Division on February 16, 2000.

10. Respondent Collins was not involved in any form or fashion with any payment to the player under the age of twenty-one (21) pursuant to the violation sustained by the Department in this matter, other than owning certain licensed Type III video poker machines located at The Pantry #476.

11. Any payment to UCI Buckmon from the video poker machine(s) located within The Pantry #476 was made solely by agents and/or employees of The Pantry #476.

12. Employees of The Pantry #476 do not generally act as agents of Respondent Collins.



CONCLUSIONS OF LAW

Based on the above Findings of Fact and Stipulations of Fact, I conclude the following as a matter of law:

1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant to S.C. Code Ann. §§12-4-30(D) (Supp. 1999) and 1-23-320 (1999).

2. The Department contends that the Respondent violated S.C. Code Ann. §12-21-2804(C) (Supp. 1999) which provides:

No person under twenty-one years of age may receive a payout as a result of the operation of the machines licensed under Section 12-21-2720 (A)(3).

3. S.C. Code Ann. §12-21-2804(F) provides that:

A person violating subsections (A), (B), (D), or (E) of this section is subject to a fine of up to five thousand dollars to be imposed by the department. . . . The department shall revoke the licenses of any person issued pursuant to the provisions of Article 19 of this chapter for a violation of subsection (C) of this section.

Although the Video Game Machines Act found under Article 20 of Title 12 does not define the term "person," I find the definition of "person" in Article 17 of Title 12 of the S.C. Code to be persuasive. That definition sets forth: "[t]he word person means individual, partnership, corporation, association, or organization of any kind whatsoever." S.C. Code Ann. § 12-21-2410(3) (Supp. 1999). (2) Respondent Collins is therefore a person within the meaning of Section §12-21-2804(F). However, the Department did not establish that Collins did not comply with Section 12-21-2804(F).

The Department did not provide any evidence that Respondent Collins knew or should have known of the cash payouts involved in this matter or of any other improper cash payouts.

To the contrary, the parties stipulated that the UCI was not an employee of Respondent Collins

and that Collins was not involved in any form or fashion with any payment to the under-aged UCI. Our Supreme Court recently addressed the issue of third party liability relating to a "single place or premises" violation of S.C. Code Ann. §12-21-2804(A) in South Carolina Department of Revenue vs. Collins Entertainment Corp., 340 S.C. 77, 530 S.E. 2d 635 (2000). In Collins, the Department charged the licensee with "operating in violation of the 'one employee/one location' rule" of 27 S.C.Code Ann. Regs. 117-190. The Court upheld the Administrative Law Judge's determination that S.C. Code Ann. § 12-21-2804(A) means that "the 'maintain' and 'permit to be used' provisions of § 12-21-2804(A) . . . apply to the use of the licensed machines after the licensee had 'applied for [and] received' the licenses." Collins at 636. The Court further found that "where the violation occurred in the use of the machines and not their licensure, only the persons(s) directly involved in the business operation is subject to a fine." Id.

Here, the penalty provision of Section 12-21-2804(F) (Supp. 1999) that was applicable to the violation in Collins is the same provision that is applicable to the violation in this case. Section 12-21-2804(F) begins by setting forth that "[a] person violating subsections (A), (B), (D), or (E)" is subject to a fine. The latter part of Section 12-21-2804(F) sets forth that "[t]he department shall revoke the licenses of any person issued pursuant to the provisions of Article 19 of this chapter for a violation of subsection (C) of this section." (emphasis added). In Collins, the South Carolina Supreme Court established that the penal provisions of the Video Games Machines Act are strictly construed against the Department and liberally in favor of the accused violator. Furthermore, the Department "must bring [its] case clearly within the language and meaning of the statute awarding the penalty." Collins, at 636. Reading the provision as a whole, Section 12-21-2804(F) can clearly be interpreted as requiring that the establishment license of The Pantry #476, the person who violated the Act, be revoked. To the contrary, Section 12-21-2804(F) does not specifically set forth that the machine licenses shall be revoked. In Section 12-21-2804(A), the General Assembly specifically required the revocation of "the licenses of machines located in an establishment which fails to meet the requirements of this section." Therefore, if the General Assembly had intended that the machine licenses be revoked no matter what person violated Section 12-21-2804(C), the General Assembly presumably would have utilized revocation language similar to Section 12-21-2804(A). Consequently, since there is no evidence that Collins violated Section 12-21-2804(C), revocation of its machine licenses is improper.

The Department also argues that the revocation provisions of Section 12-21-2804(A) are applicable to each subsection of Section 12-21-2804, including Section 12-21-2804(C). Section 12-21-2804(A) requires the revocation of "the licenses of machines located in an establishment which fails to meet the requirements of this section." (emphasis added). The Department contends that since the General Assembly used the term "section" rather than "subsection," the necessary implication is that a violation of any provision of Section 12-21-2804 requires revocation of the machine licenses in the establishment in which the violation occurred.

If the plain and unambiguous language in a statute conveys a clear and definite meaning, the statute should not be altered or redefined . Paschal v. State Election Comm'n, 317 S.C. 434, 454 S.E. 2d 890 (1995). In other words, unless the language used in a statute "requires interpretation or may be reasonably considered ambiguous," a court should not attempt to construe a statute. 73 Am. Jur. 2d Statutes § 194 (1974). An ambiguity arises when the language of a statute is capable of being understood by reasonably well informed persons in either of two or more senses. Southeastern Fire Ins. Co. v. South Carolina Tax Comm'n, 253 S.C. 407, 171 S.E. 2d 355 (1969). Furthermore, in the interpretation of statutory terms, the doctrine of construction, noscitur a sociis controls. "That is, the meaning of particular terms in a statute may be ascertained by reference to words associated with them in the statute." 73 Am. Jur. 2d Statutes § 213 (1974). See Southern Mut. Church Ins. Co. v. South Carolina Windstorm and Hail Underwriting Ass'n., 306 S.C. 339, 412 S.E.2d 377 (1991).

In this case, the phrases "section" and "subsection" are both utilized in Section 12-21-2804. Specifically, Section 12-21-2804(F) and (G)(2) use the phrase "subsection" to limit the application of Section 12-21-2804. In fact, Section 12-21-2804(F) sets forth that "[a] person violating subsections (A), (B), (D), or (E) of this section is subject to a fine of up to five thousand dollars to be imposed by the department." (emphasis added). The use of two different terms establishes the legislative intent that the terms have distinct meanings. Therefore, the plain meaning of "section" in 12-21-2804(A) appears to apply to all of 12-21-2804. On the other hand, the plain meaning of "subsection" appears to apply to the individual enumerated parts of Section 12-21-2804. Consequently, I agree with the Department that the language "this section" within Section 12-21-2804(A) appears to reference all of Section 12-21-2804, including subsection (C).

However, the Department's own procedure set forth in Revenue Procedure 99-1 does not apply the mandatory revocation of the machine owner's licenses to all of the different types of violations of Section 12-21-2804. Specifically, for a first offense violation of subsections (B), (C), and (E) of Section 12-21-2804, the Department only requires that the location operators be liable for the penalties imposed for those violations. See Revenue Procedure 99-1. Accordingly, the Department's own written policy does not call for revocation of the machine owner's licenses for a first violation of Section 12-21-2804(C), contrary to the position taken by the Department in this case against Collins.

In Weaver v. South Carolina Coastal Council, 309 S.C. 368, 423 S.E. 2d 340 (S.C. 1992), the South Carolina Supreme Court held that the equal protection and due process provisions of the state and federal constitutions require that individuals who are "similarly situated" are entitled to be treated in the same manner as the Department has treated others. However, no specific evidence was offered that established that individuals who were "similarly situated" were treated in a dissimilar manner. Nevertheless, since the Department has established a written policy that contradicts the position that revocation of the machine owner's licenses is mandatory for a first violation of Section 12-21-2804(C), I find that the revocation of the machine licenses under the facts of this case would be improper.

ORDER

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

ORDERED that the citation issued against Respondent Collins is dismissed.

AND IT IS SO ORDERED.





________________________________

Ralph K. Anderson, III

Administrative Law Judge





December 13, 2000

Columbia, South Carolina

1. This matter was originally captioned with The Pantry, Inc., d/b/a/ The Pantry #476 as a Respondent. By Consent Order filed on April 26, 2000, The Pantry and the Department of Revenue resolved their issues. Therefore, the remaining issue in this matter is Collins Holding Corporation's accountability for the actions of employees of The Pantry, Inc., d/b/a The Pantry #476. Therefore, Collins is the only Respondent in this Order.

2. Also, Black's Law Dictionary defines "person" as, "[i]n general usage, a human being (i.e., natural person), though by statute term may include labor organizations, partnerships, associations, corporations, legal representatives, trustees, trustees in bankruptcy, or receivers." Black's at 1142 (6th ed. 1990).


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