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. Anderson Lodge, 1206 BPOE

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Anderson Lodge, 1206 BPOE
 
DOCKET NUMBER:
96-ALJ-17-0448-CC

APPEARANCES:
Carol I. McMahan
Attorney for Petitioner

Harold R. Lowery
Attorney for Respondent
 

ORDERS:

FINAL ORDER AND DECISION

This matter comes before me pursuant to Respondent Anderson Lodge's request for a contested case hearing. Anderson Lodge requested a hearing on October 22, 1996 to contest the Department of Revenue's ("Department") issuance of a Final Department Determination of an Administrative Violation on October 4, 1996. The Department alleges that Anderson Lodge violated S.C. Code Ann. §§ 12-21-2720(A) and 12-21-2728 (Supp. 1995) by maintaining four Class III machines for operation without Class III licenses and by failing to obtain an operator's license.

The Department seeks a $10,000 ($2,500 per machine) penalty for the alleged violation of Section 12-21-2720(A) and a $2,500 penalty for the alleged violation of Section 12-21-2728. A hearing was held at the Administrative Law Judge Division on January 21, 1997.

This tribunal concludes that the Department did not present sufficient evidence to establish that Anderson Lodge violated Section 12-21-2720, but that sufficient evidence was presented to establish a violation of Section 12-21-2728.

FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. On October 4, 1996, the Department issued a Final Department Determination of an Administrative Violation to Anderson Lodge. The Department alleges that Anderson Lodge violated S.C. Code Ann. § 12-21-2720(A) by maintaining/operating four Class III machines on its premises without licenses. The Department seeks a $10,000 ($2,500 per machine) penalty. The Department also alleges that Anderson Lodge violated S.C. Code Ann. § 12-21-2728 by failing to obtain an operator's license and therefore seeks a $2,500 penalty.

2. On October 22, 1996, Anderson Lodge requested a contested case hearing because of the Department's allegations.

3. Revenue Agents Carol R. King and Harold D. Felmet visited Anderson Lodge on February 15, 1996 for a license inspection. Upon reaching the door to the subject location, Revenue Agent King pressed the door bell buzzer. The custodian came to the door. He asked the agents to wait outside while he located the manager, Mr. Blackwell. The manager controls and determines whether persons enter who do not otherwise possess card entry door keys. Approximately three to four minutes elapsed before the manager came to the door.

4. The agents were granted access by the manager and they proceeded to inspect the premises.

5. There were only a small number of patrons on the premises: one person was at the bar and a "few" other people were at a table playing cards. The agents discovered four Class III machines in an area near the bar/lounge. Two machines were against one wall and the other two were against another wall.

6. The agents did not observe anyone playing the machines. The machines were not plugged into electrical outlets, but the electrical cords of the machines were lying on the floor below the outlets. The backs of the machines were against the wall so that the faces of the machines were accessible.

7. Revenue Agent King testified that the faces of the machines were warm to the touch. The agents did not determine if the machines contained money.

8. At least two of the machines were located on a wall against a heat vent that ran the length of the wall. The heating system was being operated on the day in question, as the high temperature was in the 50s and the low in the 30s.

9. On February 15, 1996, Respondent Anderson Lodge did not possess an operator's license or Class III licenses for the four Class III machines it owned and which were located on the premises.

10. Revenue Agent Felmet suggested to the manager, Mr. Blackwell, that he move the machines to another location so as to avoid the appearance that they were being used. Respondent Anderson Lodge complied and the machines were moved to another room in the lodge and covered with sheets that same day.

11. During the time of inspection, February 15, 1996, the operation of Class III machines were illegal in Anderson County pursuant to S.C. Code Ann. § 12-21-2806, et seq. (Supp. 1995).

CONCLUSIONS OF LAW AND ANALYSIS

A.

1. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1995) and S.C. Code Ann. § 1-23-320 (Supp. 1995), the Administrative Law Judge Division has jurisdiction to hear this case.

2. As the moving party, Petitioner Department of Revenue bears the burden of proving by a preponderance of the evidence that the Respondent Anderson Lodge violated Sections 12-21-2720 (A) and 12-21-2728.

3. The preponderance of the evidence "is evidence which is of the greater weight or more convincing than the evidence which is offered in opposition to it . . . ." Black's Law Dictionary 1182 (6th ed. 1990). "The preponderance of the evidence means such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in the mind the belief that what is sought to be proved is more likely true than not true." Sanders, Neese, and Nichols, South Carolina Trial Handbook, § 9:5 Quantum of Evidence in Civil Cases(1994), (citing Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955)).

4. Evidence of allegations must be sufficient and probative of the matter to be proven. See Coleman v. Palmetto State Life Ins. Co., 241 S.C. 384, 128 S.E.2d 699 (1962).

5. The test for the sufficiency of a proffer of evidence to warrant a finding is as follows:

A . . . finding must be based on the evidence and . . . on the facts proved . . . . [A]lthough difficulty of proof does not prevent the assertion of a legal right, the . . . finding cannot rest on surmise nor can it rest on mere speculation. Likewise, . . . a . . . finding cannot rest on conjecture. . . guesswork . . . or rest on supposition, assumption, imagination, suspicion, arbitrary action, whim, caprice, illogical and unsound reasoning, innuendo, percentage, likelihood, mere theory, or conclusions that are in conflict with undisputed fact . . . The evidence on which the . . . finding is based must be competent, legal evidence received in the course of the trial, credible, and of probative force, and must support every material fact. The decision should be against the party having the burden of proof where there is no evidence, or the evidence as to the material issue is insufficient. . . . (emphasis added).

32 C.J.S. Evidence § 1042 (1964); see also S.C. Code Ann. § 1-23-320(i) (Supp. 1995).

6. Evidence has probative value "if it tends to prove an issue." Black's Law Dictionary 1203 (6th ed. 1990).

7. Circumstantial evidence means:

. . . proof that does not actually assert or represent the proposition in question, but that asserts or describes something else, from which the trier of fact may either (1) reasonably infer the truth of the proposition, in which case the evidence is not only relevant under Rule 401 but is sufficient as well, or (2) at least reasonably infer an increase in the probability that the proposition is in fact true, in which case the evidence is relevant under Rule 401 (assuming that the proposition is of consequence to the determination of the action) but may not be sufficient by itself to create a question for the trier of fact to decide.

(footnotes omitted). Gastineau v. Murphy, Op. No. 2517 at 5, 1996 WL 328078 (S.C. Ct. App. decided June 10, 1996), quoting 29 Am. Jur. 2d Evidence § 313 (1994). However, inferences drawn should not rest on conjecture or speculation. Id.

8. "Any fact in issue may be established by circumstantial evidence, if the circumstances, which must themselves be proved, lead to the conclusion with reasonable certainty." McCready v. Atlantic Coast Line R. Co., 212 S.C. 449, 455, 48 S.E.2d 193, 196 (1948) (emphasis added).

9. "Any fact in issue may be proved by circumstantial evidence as well as direct evidence, and circumstantial evidence is just as good as direct evidence if it is equally as convincing to the trier of the facts." St. Paul Fire & Marine Ins. Co. v. America Ins. Co., 251 S.C. 56, 59, 159 S.E.2d 921, 923 (1968) (emphasis added).

10. It is well established that in interpreting a statute, the court's primary function is to ascertain the intention of the legislature. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); First Savings Bank, Inc. v. Gold Coast Assoc., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990); State v. Harris, 268 S.C. 117, 232 S.E.2d 231 (1977). In ascertaining the intent of the legislature, a court should not focus on any single section or provision but should consider the language of the statute as a whole. Creech v. S.C. Public Service Authority, 200 S.C. 127, 20 S.E.2d 645 (1942).

Furthermore, in construing statutes, the language used should be given its plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation. Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988); Home Health Service v. S.C. Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994). Where terms of a statute are clear and unambiguous, they must be applied according to their literal meaning. Medlock v. Ford F-150 Pick Up, et al., 308 S.C. 68, 417 S.E.2d 85 (1992); Green v. Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977).

11. S.C. Code Ann. § 12-21-2738 (Supp. 1995) provides penalties for failure to comply with Section 12-21-2720(A)(3).

12. Section 12-21-2720(A)(3) provides in pertinent part:

(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 nonpayout pin table type with levers or "flippers" operated by the player by which the course of the balls may be altered or changed.

S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1995) (emphasis added).

13. Section 12-21-2728 provides in pertinent part:

(A) In addition to all other licenses required by this chapter, a person who owns or operates devices described in Sections 12-21-2720 and 12-21-2730 shall obtain an operator's license biennially as follows:
. . .
(3) two thousand dollars for devices in Section 12-21- 2720(A)(3).
. . .
(C) The licenses provided by this section are subject to Section 12-21-2734 and are a condition precedent to engaging in or the continuing operation of machines described in this chapter.

S.C. Code Ann. § 12-21-2728 (Supp. 1995) (emphasis added).

B.

The evidence proffered by the Department in this case does not meet the requisite burden of proof to find a violation of S.C. Code Ann. § 12-21-2720. The evidence is insufficient and, as the trier of fact, this tribunal is simply not persuaded that Anderson Lodge maintained for use or permitted the use of the Class III machines located on the premises on the day of inspection, February 15, 1996. If the opposite result were reached, it would improperly rest on speculation and conjecture.

As to Section 12-21-2728, this statute requires a person who owns or operates a Class III machine to obtain an operator's license. On the contrary, a counter argument to this statutory construction is that an operator's license is only required when the owner or operator maintains Class III machines for operation. However, the Department has long interpreted S.C. Code Ann. § 12-21-2728 to require the owner of such machines to obtain an operator's license regardless of whether the machines were actually being operated, and this construction is entitled to respectful consideration. Emerson Elec. Co. v. Wasson, 287 S.C. 394, 339 S.E.2d 118 (1986); Home Health Service v. S.C. Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994); Shasta Beverages v. S.C. Tax Comm'n, 280 S.C. 48, 310 S.E.2d 655 (1983) (to extent that there may be ambiguity, long-established administrative practice should be controlling). Such an interpretation appears consistent with what the General Assembly intended, as the phrase "owns or operates" is used repeatedly throughout Section 12-21-2728. Further, "a statute should be so construed that no word, clause, sentence, provision or part shall be rendered surplusage, or superfluous . . . ." 82 C.J.S. Statutes § 346; Savannah v. Shuman, 250 S.C. 344, 157 S.E.2d 864 (1967). This tribunal has no legislative powers and the justice or wisdom of statutes rests exclusively with the General Assembly. See State v. Wallace, 295 S.C. 448, 369 S.E.2d 657 (Ct. App. 1988). Finally, even though the use of Class III machines was illegal in Anderson County at the time of inspection, the mere illegality of the use of the machines does not obviate the requirement for licensure under Section 12-21-2728. See McMullin v. S.C. Dep't of Revenue and Taxation, __ S.C. __, 469 S.E.2d 600 (1996) (in which a tax is imposed on marijuana and other controlled substances for acquisition or possession in this State by a "dealer").

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law/Analysis, IT IS HEREBY ORDERED that the Department shall suspend the monetary fines imposed for the alleged violation of S.C. Code § 12-21-2720 and shall sustain the fine imposed for the violation of S.C. Code 12-21-2728.

IT IS FURTHER ORDERED according to ALJD Rule 29(B), issues raised in the proceedings, but not addressed in the Order are deemed denied.

AND IT IS SO ORDERED.



______________________________

JOHN D. GEATHERS

Administrative Law Judge

Post Office Box 11667

Columbia, South Carolina 29211-1667



February 7, 1997

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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