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. Scotts Vending, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Scotts Vending, Scotts Vending, Inc., d/b/a The Donut Hole, d/b/a The Donut Hole Unit A, and Andrews Amusement
 
DOCKET NUMBER:
96-ALJ-17-0528-CC

APPEARANCES:
Carol McMahan, Esquire, for Petitioner

Rolf M. Baghdady, Esquire, for Respondent
 

ORDERS:

ORDER AND DECISION

This matter came before me pursuant to a citation issued by the Department of Revenue for violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) by allowing the use of more than five Class III licenses acquired pursuant to S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) for machines in a "single place or premises," as defined in 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996). After notice to each of the parties except for Andrews Amusement, a hearing was conducted on March 5, 1997. The Respondent argues (1) the businesses were actually "closed" during the time of the alleged violation and (2) license revocation would be an unconstitutional forfeiture because the statutory scheme does not provide adequate notice of what was required.

Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(B).

FINDINGS OF FACT

I make the following findings of fact, taking into account the burden on the parties to establish their respective cases by a preponderance of the evidence and taking into consideration the credibility of the witnesses:

Scotts Vending, Inc. operates the video-gaming business known as "The Donut Hole" at 2318 Decker Boulevard, Columbia, South Carolina, in Richland County.

Donut Hole, Inc. operates the video-gaming business known as "The Donut Hole Unit A" at 2318 Decker Boulevard, Columbia, South Carolina, in Richland County.

Andrews Amusement was not notified of the hearing, and DOR "is not seeking to revoke Andrews Amusements' licenses." Petitioner's Notice and Motion for Joinder of Additional Parties at 1.

On June 13, 1996, Carol King and Tina Lee, agents of the Department of Revenue (DOR) inspected the businesses located at 2318 Decker Boulevard, Columbia. The agents gathered information, drew a diagram of the location, and took pictures.

The location included a common area with a doughnut counter, and three rooms containing Class III video-game machines.

During the inspection, no employee was located on the premises of two of the rooms containing Class III video-game machines, The Donut Hole or The Donut Hole Unit A.

At the time of inspection, the doors to The Donut Hole and The Donut Hole Unit A were open, the lights to those two businesses were on, and the machines within those two businesses were on and operational.

The inspection occurred during business hours of The Donut Hole and The Donut Hole Unit A.

There were no "closed" signs on either of the doors to The Donut Hole or The Donut Hole Unit A and no information to indicate that the businesses were closed or that the machines within were unavailable for play.

During the time of inspection, a customer was operating Class III video game machines in another room not cited.

On June 13, 1996, The Donut Hole and The Donut Hole Unit A contained the following Class III video-game machines:

Video Gaming Business Video Game Machine Licensee (Owner)
The Donut Hole 41246 (Andrews Amusement)

43717 (Scott's Vending)

43768 (Scott's Vending)

44327 (Scott's Vending)

3810213 (Scott's Vending)

The Donut Hole Unit A 041242 (Andrews Amusement)

041243 (Andrews Amusement)

043770 (Scott's Vending)

044328 (Scott's Vending)

3810215 (Scott's Vending)



On June 13, 1996, the revenue officers issued a citation for a regulatory violation and a proposed assessment report against Respondent Scott's Vending, d/b/a The Donut Hole, for violation of the single place or premises requirement of Section 12-21-2804(A) and S.C. Code Regs. 117-190. Subsequently, the Department issued a Final Determination to Scott's Vending regarding the citation issued.

Petitioner seeks a $5,000 fine against Scott's Vending, Inc., revocation the seven Class III video-game machine licenses located in The Donut Hole and The Donut Hole Unit A, and a six-month prohibition on the licensure and operation of Class III video-game machines in The Donut Hole and The Donut Hole Unit A.

Respondent Scotts Vending permitted the use of more than five Class III machines at a single place or premises on June 13, 1996.

CONCLUSIONS OF LAW

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

Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1996) and S.C. Code Ann. § 1-23-320 (Supp. 1996), the Administrative Law Judge Division has jurisdiction to hear this matter.

Petitioner alleges that on June 13, 1996, Respondents violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) and 27 S.C. Code Regs. 117-190 (Supp. 1996) by permitting licenses to be used for the operation of more than five Class III video game machines at a single place or premises.

Section 12-21-2804(A) provides:

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 Section 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 S.C. Code Ann. § 12-21-2720(A)(3) at a single place or premises. . . . (emphasis added).

Pursuant to S.C. Code Ann. § 12-21-2798 (Supp. 1996), DOR is authorized to promulgate regulations to assist in the administration and enforcement of the Video Game Machines Act.

27 S.C. Code Regs. 117-190 was promulgated to clarify the meaning of the phrase "single place or premises" as set forth in Section 12-21-2804(A). This regulation, effective June 23, 1995, provides in relevant part:

A "single place" or "premises" means a structure surrounded by exterior walls or fire walls consistent with the requirements of the applicable building code (or where no building code is applicable, a one hour rated firewall), provided such exterior walls and fire walls may not have any windows, doors or other openings leading to another area where video game machines are located.

If a structure surrounded by exterior walls has two or more areas where video game machines are located, each surrounded by exterior walls or fire walls as defined and required above, the Department must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines.

In determining whether each entity is in fact a single place or premises, the Department of Revenue will consider the following factors:

(1) Does each entity or business have a separate electric utility meter?

(2) Does each entity or business have at least one separate employee on the premises during business hours?

(3) Does each entity or business have a separate local business license where required?

(4) Does each entity or business have a separate state sales tax license?

A positive answer to these four questions is required for each area to be considered a "single place or premise" for purposes of the Video Game Machines Act.

27 S.C. Code Regs. 117-190 (Supp. 1996) (emphasis added).

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); State v. Harris, 268 S.C. 117, 232 S.E.2d 231 (1977); First Sav. Bank, Inc. v. Gold Coast Ass'n., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990) .

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. Pub. Serv. Auth., 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. Home Health Serv. v. South Carolina Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994); Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988). Where terms of a statute are clear and unambiguous, they must be applied according to their literal meaning. Medlock v. 1985 Ford F-150 Pick Up, 308 S.C. 68, 417 S.E.2d 85 (1992); Green v. Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977).

Respondents argue that the statute and regulation are unconstitutionally vague and therefore violate due process by failing to put the Respondents on notice about what is required to comply with the statute. This argument is without merit. The statute clearly prohibits the use of more than five Class III licenses in a single place or premise. The General Assembly authorized DOR to promulgate regulations necessary to enforce the statute. DOR promulgated Regulation 117-190 to clarify what constitutes a single place or premise.

With respect to the employee requirement, the regulation requires that each individual game room have a separate employee working in that room at all times during business hours. If a game room is accessible to customers and no employee is present in that room, then that room is being operated in violation of Section 12-21-2804(A). An employee working in a common area or anywhere else outside the game room is not considered to be "on the premises" of the game room. See South Carolina Dep't of Revenue and Taxation v. Stacks, 95-ALJ-17-0742-CC (March 8, 1996) and S.C. Revenue Ruling 95-13 (August 1, 1995). To prevent a violation from occurring, if an employee leaves a game room during business hours, the operator must immediately either replace the employee with another, close the game room from public access, or render all video game machines in that room inoperable. It is not inconvenient or a burden on the licensee to simply close the doors to indicate that the machines in that room are not available for play.

Those who engage in a particular business bear the responsibility of familiarizing themselves with the applicable statutes and regulations governing the industry. Cf. South Carolina Wildlife & Marine Resources Dep't v. Kunkle, 287 S.C. 177, 179, 336 S.E.2d 468, 469 (1985) ("[I]t is a well-settled maxim that ignorance of the law is no excuse").

"Business hours" are "[i]n general those hours during which persons in the community generally keep their places open for the transaction of business." Black's Law Dictionary (5th ed. 1979); cf. Jolly v. Marion Nat'l Bank, 267 S.C. 681, 231 S.E.2d 206 (1976) (inspection of shareholder record during "business hours"); Florence Morning News v. Building Comm'n of City and County of Florence, 265 S.C. 389, 218 S.E.2d 881 (1975) (newspaper had the right to inspect actual jail book and log during regular "business hours" of jail); Welborn v. Page, 247 S.C. 554, 565, 148 S.E.2d 375, 380 (1966) ("The reasonable assumption is that the motor vehicle traffic to and from . . . [automobile wrecking service] will be spread over the usual business hours"); Montgomery v. Employers Mut. Liability Ins. Co., 247 S.C. 46, 145 S.E.2d 437 (1965) (driver of pickup truck customarily used employer-owned truck for his own purposes outside of "business hours"); Parker v. Stevenson Oil Co., 245 S.C. 275, 140 S.E.2d 177 (1965) (filling-station operator who displays merchandise in automatic vending machines on exterior premises after regular "business hours" invites entry by prospective customers).

During the time of inspection, a customer was playing in another room not cited, which indicates the business hours of the location. The inspection occurred during "business hours."

Regulations properly promulgated by an agency have the force and effect of law. Norton v. Opening Break, 313 S.C. 508, 443 S.E.2d 406 (1994).

S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) authorizes DOR to revoke licenses utilized in a fashion failing to comply with the provisions of that section.

The penalty for exceeding the maximum number of video gaming machines permitted in a single place or premises is revocation of the licenses of the Class III machines located in the establishment.

DOR "is not seeking to revoke Andrews Amusements' licenses." Petitioner's Notice and Motion for Joinder of Additional Parties at 1.

Additionally, no machine license may be issued for, nor a machine be operated at, an establishment in which a license has been revoked for a period of six months from the date of the revocation.

As the finder of fact, it is the administrative law judge's prerogative "to impose the appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633, 634 (1991). In the present case, the administrative law judge has the authority to establish the monetary fine within the allowable range provided for by S.C. Code Ann. § 12-21-2804(F) (Supp. 1996). S.C. Code Ann. § 12-4-30(D) (Supp. 1996).

Respondent Scotts Vending permitted the use of more than five Class III machines at a single place or premises on June 13, 1996.

ORDER

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

ORDERED that the Class III video game machine licenses owned by Scott's Vending and located within The Donut Hole and The Donut Hole Unit A be revoked.

IT IS FURTHER ORDERED that Respondent Scotts Vending be fined $5,000.00.

IT IS FURTHER ORDERED that the Department not issue any licenses for and the Respondents not operate any Class III machines at The Donut Hole and The Donut Hole Unit A, 2318 Decker Boulevard, Columbia, South Carolina, in Richland County, for a period of six months from the date of this order.

AND IT IS SO ORDERED.

__________________________________

ALISON RENEE LEE

Administrative Law Judge

January 27, 1998

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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