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. David R. Jennings, d/b/a High Rollers

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
David R. Jennings, d/b/a High Rollers
 
DOCKET NUMBER:
95-ALJ-17-0602-CC

APPEARANCES:
For the Petitioner: Nicholas P. Sipe, Esquire

For the Respondent: James W. Boyd, Esquire
 

ORDERS:

ORDER and DECISION

STATEMENT OF THE CASE

This matter comes before me pursuant to S.C. Code Ann. § 1-23-320 (Supp. 1994) on a written violation issued by the South Carolina Department of Revenue and Taxation (Petitioner or SCDOR) against David R. Jennings, d/b/a High Rollers (Respondent). The Petitioner alleges that the Respondent violated S.C. Code Ann. § 12-21-2726 (Supp. 1994), by maintaining for use at his place of business in York County, South Carolina four (4) unlicensed Class III video poker machines. The Petitioner seeks a $2500 penalty per machine pursuant to S.C. Code Ann. § 12-21-2738 (Supp. 1994), a $3000 license fee per machine pursuant to S.C. Code Ann. § 12-21-2720(A)(3) and a $500 meter device fee per machine, for a total penalty and assessment against the Respondent of $24,000.

The Respondent denies the alleged violation and contests the citation. It argues that current licenses were displayed on all four machines.

After timely notice to the parties, a contested case hearing was held at the Spartanburg County Courthouse on November 17, 1995.

Based upon a thorough review of the record, I conclude that the Respondent has not violated the provisions of S.C. Code Ann. § 12-21-2726 (Supp. 1994). Therefore, the citation is dismissed and no fines, penalties and/or fees are assessed against the Respondent.

EVIDENCE

Without objection, Petitioner placed into evidence the following exhibits:

Exhibit 1: Etchings prepared by Petitioner's Revenue Agent Perry Mathis of the areas on all four machines where licenses had allegedly been removed.

Also, without objection, Respondent placed into evidence as his exhibits the following:

Exhibit 1: SCDOR Type III Coin Operated Device Biennial License No. 100792, expiring May 31, 1995.
Exhibit 2: SCDOR Type III Coin Operated Device Biennial License No. 100787, expiring May 31, 1995.
Exhibit 3: SCDOR Type III Coin Operated Device Biennial License No. 100790, expiring May 31, 1995.
Exhibit 4: SCDOR Type III Coin Operated Device Biennial License No. 100789, expiring May 31, 1995.
Exhibit 5: Plastic front cover from "Cherry Deluxe" video machine, labeled ".05."
Exhibit 6: Plastic front cover from "Double Up" video machine, labeled ".25."
Exhibit 7: Plastic front cover from "Cherry Deluxe" video machine, labeled ".01."
Exhibit 8: Plastic front cover from "Double Up" video machine, labeled ".05."


FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing and taking into account the credibility of the witnesses, accuracy of the evidence and reviewing all of the exhibits carefully, I make the following findings by a preponderance of the evidence:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to both parties.

3. Respondent operates a business in York County, South Carolina. On June 23, 1994, there were approximately six video machines for usage at Respondent's business location, all owned by Albert Evans, d/b/a Evans Amusement Company (Evans).

4. Evans purchased all licenses and permits required by the Petitioner for operation of the video machines.

5. On June 23, 1994, Perry Mathis, Revenue Agent with the Petitioner, went to Respondent's business location for an inspection.

6. On that date, the licenses had been removed from the outside of the front glass of each of four Class III video poker machines. On the inside of the front glass of each machine was scotch-taped a license, each with white notebook paper attached to its back side. (Respondent's Exhibits #1-4).

7. Paul Kelly Rainey worked part-time for Respondent at his business called High Rollers in June 1994. One of his duties as an employee was to keep video machines clean and windexed. After noticing that customers tampered with the licenses, he stripped them off.

8. Randy Alex Evans, son of Albert Evans, was also a part-time employee of Respondent. He assisted Paul Kelly Rainey in peeling off the stickers and scotch-taping them to the inside of the front cover of the machines where they were displayed.

9. Subsequent to June 23, 1994, Agent Mathis visited a location in Leslie, South Carolina where Evans stored other video poker machines. Licenses had been removed from some machines there but there was nothing to identify the year or number of the removed licenses.

10. Agent Mathis issued an administrative violation and citation to Respondent for failing to have a current license conspicuously displayed on the front of four Class III video poker machines.

CONCLUSIONS OF LAW

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

1. This matter is properly before the Administrative Law Judge Division pursuant to the provisions of Chapter 23, Title 1 and S.C. Code Ann. § 12-4-30(D) (Supp. 1994).

2. The Video Game Machines Act, which regulates video poker machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. This Act is codified at S.C. Code Ann. § 12-21-2770 et seq. (Supp. 1994).

3. S.C. Code Ann. § 12-21-2726 (Supp. 1994) provides:

Every person who maintains for use or permits the use of, on a place or premises occupied by him, a machine subject to the license imposed by this article by way of proof of licensing must have a current license displayed conspicuously on the front of the machine. Except for the provisions of Sections 12-21-2774 and 12-21-2776, each machine licensed pursuant to this section must be operated in a stand alone fashion and may not be linked in any way to another coin-operated machine or device.

4. Machines licensed under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1994) include video game machines with free play features operated by a slot in which a coin or thing of value is deposited.

5. S.C. Code Ann. § 12-21-2728(A)(3) (Supp. 1994) provides as follows:

(A) In addition to all other licenses required by this chapter, a person who owns or operates devices as described in Sections 12-21-2720 and 12-21-2730 shall obtain on operator's license biennially as follows:
(1) fifty dollars for devices in Sections 12-21-2720(A)(1) and 12- 21-2730;
(2) two hundred dollars for devices in Section 12-21-2720(A)(2);
(3) two thousand dollars for devices in Section 12-21-
2720(A)(3).

6. The penalty for failing to purchase a license as required for a Class III video poker machine is provided for in S.C. Code Ann. § 12-21-2738 as follows:

A person who fails, neglects, or refuses to comply with the terms and provisions of this article or who fails to attach the required license to any machine, apparatus, billiard, or pocket billiard table, as herein required, is subject to a penalty of fifty dollars for each failure, and the penalty must be assessed and collected by the commission.
If the violation under this section relates to a machine licensed pursuant to Section 12-21-2720(A)(3), the applicable penalty amount is two thousand five hundred dollars, no part of which may be suspended, and one-half of this penalty must be deposited to the credit of the general fund of the State and one-half must be retained by or forwarded to the law enforcement or administrative agency charging the violation.

7. Where a statute is clear and unambiguous, there is no room for construction and the terms of the statute must be given their literal meaning. Southeastern Fire Ins. Co. v. South Carolina Tax Comm'n, 253 S.C. 407, 171 S.E.2d 355 (1969) and Green v. Zimmerman, 269 S.C. 535 S.E.2d 323 (1977).

8. It is possible for reasonable minds to differ as to the proper interpretation of S.C. Code Ann. § 12-21-2776 (Supp. 1994). However, "when statutes imposing taxes are involved, the well-settled rule of construction is that the statute should be construed most favorably to the taxpayer, any doubts should be resolved against the taxing authority. Ryder Truck Lines, Inc. v. South Carolina Tax Comm'n, 248 S.C. 148 S.E.2d 435 (1966). See also Duke Power Co. v. South Carolina Tax Comm'n, 292 S.C. 64, 354 S.E.2d 902, where a corporate license fee was held to be a tax.

9. "Conspicuous" is defined as easy to notice, obvious, attracting attention, as by being unusual; noticeable. The American Heritage College Dictionary, Third Edition, p. 298.

10. There is no statutory requirement that the license be affixed or displayed on the outside of the front cover, only that they be displayed conspicuously on the front of the machine. The argument by the Petitioner that the licenses became void when removed and placed on the inside of the front cover is without any legal basis. Further, there was no proof that the licenses displayed on the inside front cover of the machines were not previously displayed on the outside nor that they had been removed from other machines for placement on these machines.

11. The undisputed and uncontroverted testimony is that the licenses required by S.C. Code Ann. § 12-21-2776 were conspicuously displayed on the front glass of the four Class III video poker machines on June 23, 1994, when agent Mathis inspected them. They were scotch-taped on the inside of the front plate cover of each machine where they would and could be immediately noticeable by anyone who approached.

12. Accordingly, based upon the evidence before me, I conclude that the removal of the licenses from the outside of the front cover of the machines and the placement of them on the inside of the front cover where they were conspicuously displayed is not a violation of S.C. Code Ann. § 12-21-2726 (Supp. 1994) and accordingly, the citation and administrative violation against the Respondent should be dismissed.

ORDER

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

ORDERED that the Respondent, David R. Jennings, d/b/a High Rollers, has not violated S.C. Code Ann. § 12-21-2726 (Supp. 1994) of the Video Game Machines Act and is not subject to any penalty, fee or assessment. The Department's administrative violation and citation issued against the Respondent are dismissed.

AND IT IS SO ORDERED.

_______________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

December 4, 1995


Brown Bldg.

 

 

 

 

 

Copyright © 2022 South Carolina Administrative Law Court