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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Edwin Alewine, d/b/a Steve's Hot Dogs and Video, Room A and Room B

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Edwin Alewine, d/b/a Steve's Hot Dogs and Video, Room A and Room B
 
DOCKET NUMBER:
96-ALJ-17-0274-CC

APPEARANCES:
For the Petitioner: Carol I. McMahan, Esquire

For the Respondent: S. Jahue Moore, Esquire
 

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.


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