ORDERS:
FINAL DECISION
This matter is before the Administrative Law Judge Division pursuant to a petition filed by
the South Carolina Department of Revenue (Department), against Respondent, Edwin Alewine, d/b/a
Steve's Hot Dogs and Video, seeking assessment of a penalty for violating three provisions of Title
12, Chapter 21, Article 19, South Carolina Code of Laws. Specifically, the Department determined
the Respondent violated S.C. Code Ann. Section 12-21-2720(A) (Supp. 1995), "Operating an
unlicensed machine"; S.C. Code Ann. Section 12-21-2726 (Supp. 1995), "Failing to display a current
Class III machine license"; and S.C. Code Ann. Section 12-21-2748 (Supp. 1995), "Failing to attach
owner or operator identification to the machines." A hearing was held on September 24, 1996, at the
Administrative Law Judge Division.
The Department seeks the total amount of $20,500 for the violations at issue here. A penalty
of $2,500.00 is requested by the Department against the Respondent for operating an unlicensed
machine. A license fee in the amount of $3,000.00 pursuant to S.C. Code Ann. Section 12-21-2720
(Supp. 1995) was also imposed for this violation. For failing to display a current Class III machine
license, the Department seeks a penalty of $2,500.00. Finally, a penalty in the amount of $2,500.00
is sought for each of the five machines that failed to show the required information. The total amount
for this penalty is $12,500.00.
ISSUES
This case presents four issues. First, on November 30, 1995, did Respondent operate a Class
III video poker machine in Video Room B without a license? Second, on November 30, 1995, did
Respondent operate a Class III video poker machine in Video Room A without displaying a current
license on a machine? Third, on November 30, 1995, did Respondent operate five Class III video
poker machines which failed to have identification of the owner or operator affixed? Fourth, if there
were such violations, what are the appropriate penalties?
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 evidence:
1. Edwin S. Alewine holds retail licenses for two businesses at 1221 Augusta Road, West
Columbia, South Carolina. The two businesses are, Steve's Hot Dogs, Video Room A and Video
Room B. These businesses contain video game machines licensed under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1995). Edwin Alewine owns the Class III video game machines located in the
two establishments.
2. On November 30, 1995, Johnny Leggette, a Department employee, conducted an
inspection of these video gaming locations. Both the establishments were open for business with the
machines turned on and fully operational. The following machines were at the locations:
Location Name Machine License Number
Video Room A 46541
" 46928
" 46281
" 46930
" No Machine License
Video Room B 46434 (License revoked)
" 46536
" 46927
" 46931
" 46929
3. In Video Room B an unlicensed Class III video game machine was in operation. In
February 1995, the Respondent purchased the machine from Great Games, Inc. The license on the
machine, No. 46434, was held by Great Games, Inc. However, machine license No. 46434, had been
revoked by an Administrative Law Judge Order dated June 23, 1996, S.C. Dep't of Revenue v. Great
Games, Inc., and Edwin S. Alewine d/b/a Tina's Wild Cherry and The Lucky Cherry, Docket No. 95-ALJ-17-0184-CC (June 22, 1995).(1) The Respondent had been a party to this action and was aware
of the revocation. Nevertheless, after purchasing the machines, the Respondent operated the machine
without procuring a license from the Department. Therefore, the Respondent was operating without
a license on November 30, 1995 for that machine.
4. In Video Room A, five machines were in operation. These machines did not have any
information affixed to the machine which identified the owner or operator of the machine
5. Also in Video Room A, one of the machines in operation did not have a current license
displayed. On December 1, 1995, Respondent brought a license for this machine to the Department.
The Respondent claimed that this license was affixed to the machine but had fallen into the lower part
of the machine.
6. On December 1, 1995, the Department issued the Respondent three citations for the
violations noted by Mr. Leggette during his inspection on November 30, 1995. The first citation was
issued for operating an unlicensed machine in Video Room B in violation of Section 12-21-2720(A).
The total penalty imposed by the Department for that violation was $5,500. This consists of a license
fee in the amount of $3,000.00 and the $2,500.00 penalty imposed pursuant to Section 12-21-2738.
The second citation was issued for a violation in Video Room A, failing to display a current Class
III machine license. A penalty of $2,500.00 was imposed for that violation. The Department did not
seek an additional $3,000 license fee for this violation because Respondent presented the license to
the Department. The third violation was issued for failure to attach owner or operator identification
to the machines in Video Room A, in violation of Section 12-21-2748. A penalty in the amount of
$2,500.00, was imposed for each of the five machines that failed to show the required information.
The total amount imposed by the Department for this violation is $12,500.00.
CONCLUSIONS OF LAW
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant
to S.C. Code Ann. § 12-4-30 (D) (Supp. 1995) and S.C. Code Ann. § 1-23-320 (Supp. 1995).
2. The licensing of Class III video games is governed by the provisions of Articles 19 and
20, Chapter 21, Title 12, South Carolina Code of Laws. Section 12-21-2720(A) (3) (Supp. 1995)
provides:
(A) Every person who maintains for use or permits the use of, on a place or premises
occupied by him, one or more of the following machines or devices shall apply for and
procure from the South Carolina Department of Revenue and Taxation a license
effective for two years for the privilege of making use of the machine in South
Carolina and shall pay for the license a tax of fifty dollars for each machine in item (1),
two hundred dollars for each machine in item (2), and three thousand dollars for each
machine in item (3):
* * * *
(3) a machine of the nonpayout type, in-line pin game, or video game
with free play feature operated by a slot in which is deposited a coin
or thing of value except machines of the nonpayout pin table type with
levers or "flippers" operated by the player by which the course of the
balls may be altered or changed. . . .
The specific words of this statute require that a license be obtained for the legal operation of
a Class III video machine. However, Respondent operated a video poker machine with license No.
46434 though the license had previously been revoked.
3. S.C. Code Ann. § 12-21-2726 (Supp. 1995) 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. . . . (emphasis added)
Respondent argues that there was a license on the machine but it had fallen down underneath
the glass and could not be seen. He argues that on December 1, 1995, he brought this license to the
Department to prove that he was in compliance with the law. In Garris v. Governing Bd. of S.
Carolina, S.C. , 461 S.E.2d 819 (1995), the Court addressed the requirements of S.C. Code Ann.
Section 1-23-370 (1986). That statute requires that a licensee be "given an opportunity to show
compliance with all lawful requirements for the retention of the license." The Court concluded that
the statute requires the licensee be given an opportunity to show compliance existed at the time the
alleged violation occurred not to rectify any matters they failed to comply with at the time of the
violation. The Court stated:
Showing compliance means showing that at the time of the alleged violation appellant
was in full compliance with the law. See Hinson v. Georgia State Board of Dental
Examiners, 135 Ga. App. 488, 218 S.E.2d 162 (1975). We construe Section 1-23-370 as providing an opportunity to show that no violation occurred instead of
providing an opportunity to correct deficiencies.
Here, on December 30, 1995, Petitioner operated a Class III video game machine on his
premises without a license conspicuously displayed on the front of it. Therefore, he did not meet the
statutory requirements for the legal operation of the machine on that date. Any attempts to meet the
requirement subsequent to that date do not cure the prior violation.
4. S.C. Code Ann. § 12-21-2748 (Supp. 1995) provides:
Any person who owns or operates devices described in Sections 12-21-2720 and 12-21-2730 must have attached to the machine information identifying the owner or
operator of the machine. The identification must be placed on an area of the machine
which is visible for inspection purposes. This identification is a condition precedent
before the machines may be operated on location. Failure to comply with this
requirement subjects the violator to the penalty and enforcement provisions of this
chapter and of Chapter 54 as applicable.
On November 30, 1995, the five machines in operation in Video Room A did not have any
owner or operator identification affixed to them. The above statute specifically requires that the
owner or operator of Class III video game machines must have owner or operator identification
affixed to a visible area on the machine. Therefore, the Respondent failed to comply with the
mandate of the statute.
5. A cardinal rule of statutory construction is that words used in a statute should be given
their plain and ordinary meaning. Multimedia Inc. v. Greenville Airport Commission, 287 S.C. 521,
339 S.E.2d 884 (Ct. App. 1986). When the terms of a statute are plain and unambiguous, the courts
must apply those terms according to their literal meaning. Holley v. Mount Vernon Mills, Inc., 312
S.C. 320, 440 S.E.2d 373 (1994). Similarly, words should be given their plain and ordinary meaning
without resorting to subtle or forced construction to limit or expand the statute's operation. State
v. Blackmon, 304 S.C. 270, 430 S.E.2d 660 (1991).
6. S.C. Code Ann. Section 12-21-2738 (Supp. 1995), provides the statutory guidelines
for the imposition of penalties where violations of Article 19 occur. This section provides in relevant
part:
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. . . . (emphasis added).
Thus, this statute requires that where a violation of Article 19, pertaining to machines licensed
pursuant to Section 12-21-2720(A)(3) is found, a mandatory penalty in the amount of $2,500 must
be imposed, no part of which may be suspended. In addition, the Department seeks to impose a
license fee in the amount of $3,000.00. The Department contends that since Section 12-21-2720
requires all Class III machines to be licensed, the mere imposition of a $2,500 penalty where there
is a failure to obtain the license fails to encourage compliance with the requirements of the statute.
In other words, if the only penalty imposed on a person who violates the licensing statute is $2,500,
there would be no incentive to comply with the statute. However, there are no statutory provisions
authorizing the Department's imposition of a license fee pursuant to the Respondent's operation of
a machine without a license. An administrative agency has only such powers as have been conferred
by law and it must act within the authority created for that purpose. Bazzle v. Huff, ___ S.C. ___,
462 S.E.2d 273 (1995). Since no statute authorizes the Department to impose a license fee in
addition to the $2,500 penalty for operating a machine without a license, the Department is without
authority to do so. If the Respondent chooses to continue to operate video poker machines without
a license after being cited for such a violation he would expose himself to further violations and
penalties.
ORDER
Based upon the Findings of Fact and Conclusions of Law, it is hereby:
ORDERED, that a fine of $17,500 is imposed upon the Respondent.
AND IT IS SO ORDERED.
______________________________________
Judge Ralph King Anderson, III
Administrative Law Judge
March 3, 1997
Columbia, South Carolina
1. This Order was upheld on appeal, South Carolina Dep't. of Revenue v. Great Games, Inc., Edwin S.
Alewine, d/b/a Tina's Wild Cherry and The Lucky Cherry, Court of Common Pleas, County of Lexington, Case No.
95-CP-32-1589 (October 4, 1995). This decision, October 4, 1995, was not appealed. |
