ORDERS:
FINAL DECISION
STATEMENT OF THE CASE
This matter comes before me pursuant to S.C. Code Ann. § 1-23-320 (Supp. 1996) on a
written violation issued by the South Carolina Department of Revenue ("Petitioner or
Department") against Hiam Z. Jridi and Rowan, Inc., d/b/a Maxi Mart ("Respondent") at 2507
Chesnee Highway, Spartanburg County, South Carolina. Petitioner alleges that the Respondent
violated S.C. Code Ann. § 12-21-2804 (A)(Supp. 1996) by allowing the use of more than five
video poker machines at a "single place" or "premise". The Petitioner seeks a $5,000.00
monetary penalty, an order denying the issuance of any video machine licenses at Respondent's
location for six months and the revocation of the following Class III video machine licenses:
049604, 040844, 049605, 040845, 040846 and 049603. The Respondent denies the alleged
violation and contests the citation.
A contested case hearing was held on January 17, 1997 at the Spartanburg County
Courthouse, Spartanburg, South Carolina.
After a thorough and complete review of the record and post-trial briefs submitted to the
court, I conclude that the Respondent violated S.C. Code Ann. § 12-21-2804(A). Therefore, the
licenses of the six video machines must be revoked; and no new licenses may be issued at the
location for six months. However, for the reasons state herein, the monetary penalty shall not be
assessed against the Respondent.
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. This Division has personal and subject matter jurisdiction.
2. Notice of the date, time, place and subject matter of the hearing was timely given
to both parties.
3. Hiam Z. Jridi and her husband, Zoheir "Joe" Jridi, are the owners of Rowan, Inc.
through which they operate the family business known as Maxi Mart. Anwar Jebril is listed as the
President and Secretary of Rowan, Inc. on its Business Tax Application dated February 18, 1994.
This application was filed with the Department's office in Spartanburg, South Carolina. Maxi
Mart is located at 2507 Chesnee Highway, Spartanburg, South Carolina. Mr. Jridi is the manager
of the store, handles most of the paperwork and is there the majority of the time it is open. They
have had the convenience store for approximately 6 to 7 years.
4. Hiam Z. Jridi holds the retail license for the store.
5. On June 1, 1994, pursuant to a "Biennial Coin-Operated Device Application" filed
by Hiam Z. Jridi, as Machine owner/licensee, with the Department's office (District # 3) in
Spartanburg, South Carolina (located in the Hillcrest Shopping Center), the Department issued to
her three (3) Type II video game machine licenses for three machines. Mrs. Jridi paid the sum of
$10,500.00 to the Department for the three biennial licenses. The license numbers issued by the
Department were: 049603, 049604 and 049605. Their expiration date was May 31, 1996.
6. On May 23, 1995, Hiam Z. Jridi again signed and filed a "Biennial Coin-Operated
Device Application" with the Department's office in Spartanburg, South Carolina. She listed
herself as the machine owner/operator for three (3) Type III video game machines and paid to the
Department the sum of $10,500.00 for three biennial licenses (a license tax of $3,500.00 for each
of the machines). The license numbers issued on that date by the Department for the three
machines were: 040844, 040845 and 040846. The licenses expire on May 31, 1997.
7. On January 15, 1996, a Revenue Officer employed by the Department went to the
location and inspected the Type III video machines. He found that six machines were turned on
and were available for play. The six machines bore the following machine license numbers:
049603, 049604, 049605, 040844, 040845 and 040846. Mr. Jridi was at the location at the time
and an administrative citation was issued by the Revenue Officer for a violation of S.C. Code
Ann. § 12-21-2804(A) for maintaining more than five Class III machines on a single place or
premises. The report/citation indicated that the Department would seek a monetary penalty of
$5,000.00.
8. On January 15, 1996 Hiam Z. Jridi and her husband Zoheir Jridi shut down one of
the video machines and it has not been operated since that date.
9. On September 18, 1995, the Department mailed to the Respondent by first class
mail the "Department Determination" letter wherein it sustained and recited the alleged violation
on January 15, 1996, the facts leading up to the written citation, a section on Law and Analysis
and advised that the Department sought a $5,000.00 monetary penalty or fine, the revocation of
the six video machine licenses and that upon their revocation, no Class III video machine licenses
would be issued at this location for a period of six months.
10. No other citations have been given by the Department to the Respondent for any
other type of violation.
11. Respondent conducted all her transactions and purchased all required state licenses
and permits at the Department's Spartanburg office. She is familiar with the employees there.
She was never informed by the Department's employees at the Spartanburg office when she
purchased the biennial video machine licenses that there was a five machine limit at a single place
or premise after June 30, 1995.
12. Respondent owns no other business location and upon purchasing the three
licenses from the Department on May 23, 1995, was of the impression and understanding that
they would not expire until May 31, 1997. Further, she felt the license would be valid at her one
place of business which is Maxi Mart.
13. The six (6) Class III video machine licenses issued by the Department to the
Respondent did not have a specific location affixed or written on them.
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. 1996).
2. The Video Game Machines Act, which regulates video game 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. 1996).
3. With regard to the number of video game machines authorized at a "single place or
premises," S.C. Code Ann. § 12-21-2804(A)(Supp. 1996) provides as follows:
(A) No person shall apply for, receive, maintain, or permit to be used, and the
commission shall not allow to be maintained, permits or licenses for the operation
of more than eight machines authorized under § 12-21-2720(A)(3) at a single place
or premises for the period beginning July 1, 1993, and ending July 1, 1994. After
July 1, 1994, the commission may not issue nor authorize to be maintained any
licenses or permits for more than five machines authorized under § 12-21-2720(A)(3) at a single place or premises.
4. Machines licensed pursuant to S.C. Code Ann. § 12-21-2720(A)(3)(Supp. 1996)
include video game machines which have a free play feature operated by a slot in which a coin or
thing of value is deposited.
5. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) states that the penalty for failing to
comply with the maximum allowable number of machines in a "single place" or "premises"
requires: (1) the revocation of the licenses of the machines located in the establishment, and (2)
prohibits the issuance of a license for a machine in the establishment for a period of six months
from the date of revocation.
6. S.C. Code Ann. § 12-21-2804(F)(Supp. 1996) provides that a person violating
subsection (A) of this statute is subject to a fine of up to five thousand ($5,000.00) dollars.
7. Respondent argues that she acted in good faith when she purchased the three
biennial licenses on May 23, 1995 with the assumption that they would be operable and good for
the three machines at the location for which they were purchased. However, no evidence was
provided to the court showing any "holding out" by employees of the Department that the
licenses would be good at the Maxi Mart location if the number of machines there exceeded five
after June 30, 1995. Also, there was nothing written or stamped on each license which required it
to be utilized on a machine at any specific location. Although the license is not transferable from
one machine to another after it has been affixed to a machine, the machine may be moved to
another location. Respondent appears to posit that she and her husband relied solely on the
terminology in the applications and thus were innocent of any violation. However, Respondent is
presumed to have known the law when she purchased the licenses for the machines. See
Smothers v. U.S. Fidelity and Guaranty Co., ___S.C.___, 470 S.E.2d 858 (Ct. App. 1996)
(everyone is presumed to have knowledge of the law and must exercise reasonable care to protect
his interests). Respondent further argues that the statute is ambiguous and that it can be
construed to allow biennial licenses purchased prior to July 1, 1994 to remain valid at the location
after June 30, 1995. It is clear that the legislature intended to limit the number of machines at a
single place or premises to five after June 30, 1995. If there were a provision prohibiting the
removal of licensed machines from one location to another, then Respondent's argument might
have some validity. Since the remainder of any period of licensure could be utilized at another
location, Respondent's argument fails.
8. Notwithstanding the duty of an owner/operator of a video game machine to
educate themselves on all rules and statutes applicable to their operation, I find that there was not
any intentional action on the part of the Respondent to evade or violate the statute limiting the
number of operational video game machines at a location after June 30, 1995. On the date of the
inspection, Respondent and her husband voluntarily shut down one machine and it has been
inoperable since that time. Further, they cooperated with the Revenue Officer. Respondent has
lost revenue from the use of that machine and will lose revenue from the usage of the other five
machines as a result of the violation. The Department properly issued the citation to the
Respondent and the violation requires that the six licenses be revoked by the Department not later
than ten (10) days from the date of this Final Decision. Further, S.C. Code Ann. § 12-21-2804(A) prohibits the issuance of a license for a video machine for a period of six months from
the date the Department revokes the licenses in conformity with this Order.
9. 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 A. 2 Dist. 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).
10. Mitigating circumstances exist in this case, given that the Video Game Machines
Act was relatively new and there was confusion in the industry concerning the application of the
statute and the Department's guidelines. Further, Respondent and her husband have acted in
good faith with the Department since notice of the violation and have incurred revenue loss and
will incur additional losses due to the revocation of the licenses and the prohibition of the issuance
of new licenses for a period from six months from the date of this revocation. Accordingly, I
conclude that the imposition of a monetary penalty, along with the revocation of the licenses and
prohibition of the issuance of others at this location, is unduly harsh. No monetary penalty shall
be assessed against Respondent.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby:
ORDERED that the Department shall revoke the six video game machine licenses,
bearing numbers 049603, 049604, 049605, 040844, 040845, and 040846, issued to the
Respondent, Hiam Z. Jridi, and it is further
ORDERED that the Department is prohibited from issuing any video game machine
licenses at this location (2507 Chesnee Highway, Spartanburg, South Carolina) for a period of six
months from the date of the revocation of the six licenses by the Department pursuant to the
terms of this Decision, and it is further
ORDERED that no monetary fine shall be imposed upon the Respondent.
AND IT IS SO ORDERED.
___________________________________
Marvin F. Kittrell
Chief Judge
Columbia, South Carolina
April 7, 1997 |
