South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

SCDOR vs. John R. Roof d/b/a Wrightway #1

South Carolina Department of Revenue

South Carolina Department of Revenue

John R. Roof d/b/a Wrightway #1

Sean Bolchoz
For Petitioner

James H. Harrison, Esquire
For Respondent



This matter comes before this tribunal pursuant to Respondent's request for a contested case hearing dated July 8, 1997. The Department of Revenue ("Department") issued a Final Agency Determination on June 27, 1997 alleging that Respondent, John R. Roof, d/b/a Wrightway #1, failed to post a penalty sign to, or on the wall behind, two video poker machines, in violation of S.C. Code Ann. §12-21-2802. After notice to the parties, a hearing was conducted on November 5, 1997.

The issues before this tribunal are (1) whether Respondent violated S.C. Code Ann. §12-21-2802 (Supp. 1996) and (2) if so, what are the proper penalties for such violations. Based upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that Respondent violated S.C. Code Ann. §12-21-2802. The penalties for such violations shall be $100.


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 January 21, 1997, Respondent operated five Class III video game machines licensed under S.C. Code Ann. §12-21-2720 at Wrightway #1, Route 1, Highway 21, Columbia, South Carolina.

2. On January 21, 1997, South Carolina Law Enforcement Division (ASLED@) Agents K.B. Stokes and C. Graham inspected the video poker machines at Wrightway #1 and determined that two of Respondent's video poker machines, #044302 and #044750, did not have prominently displayed signs citing penalties for tampering with machines, skimming proceeds, or manipulating the outcome of a machine, as required by S.C. Code Ann. §12-21-2802 (Supp. 1996).

3. On January 21, 1997, SLED Agent Stokes issued a Preliminary Findings Report for Video Gaming to Respondent, which set forth the violations. (Petitioner's Exhibit #3).

4. John R. Roof is listed on the business tax application as the business owner of the licensed establishment. (Petitioner's Exhibit #4).

5. Davis R. Brown, Jr., the Revenue Manager for the Department, sent the Respondent a letter dated April 4, 1997, notifying him of the violations and assessing a penalty of $300.00 per machine. (Petitioner's Exhibit #2).

6. The licensee of the machines assigned one of its employees to check the machines in question several times a week to ensure proper display of penalty signs as required by law. Subsequent to the issuance of the citation in this case, Respondent covered all legally required signs with Plexiglas to prevent tampering.


1. 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 case.

2. S.C. Code Ann. §12-21-2802 (Supp. 1996) states: "Each machine licensed under this article (Video Game Machines Act) or Article 19 must have a prominently displayed sign citing the penalties provided by Sections 12-21-2790, 12-21-2792, and 12-21-2794 on the wall above the machine or affixed prominently to the machine. The commission shall make these signs available free of charge."

3. The evidence is uncontroverted that the signs were not displayed on the wall above two of the machines or affixed prominently to the two machines in question.

4. Section 12-54-40(b)(3) provides that: "a person who is liable to obtain a license or purchase stamps for identification purposes, who fails to obtain or display the license properly, or who fails to affix the stamps properly, or fails to comply with statutory provisions, is subject to a penalty of not less than fifty dollars nor more than five hundred dollars for each failure." S.C. Code Ann. § 12-54-40(b)(3) (Supp. 1996) (emphasis added). Respondent is liable to obtain licenses for its video poker machines pursuant to § 12-21-2720 (A)(3) and the failure to comply with the provisions of § 12-21-2802 subjects it to a fine.

5. 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 Inv., 655 N.E.2d 266 (Ohio 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W.2d 835 (Mo. Ct. App. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W.2d 452 (Minn. Ct. 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); State Police v. Cantina Gloria's, 639 A.2d 14 (Pa. 1994).

Prior to governmental restructuring, the South Carolina Tax Commission, sitting in its adjudicatory capacity, imposed penalties for violations of statutory provisions administered by the Commission's subordinate agency. In its capacity as the fact-finder, the Tax Commission would conduct an adjudicatory hearing in all contested cases arising under Title 12 of the South Carolina Code of Laws, and would render an order containing findings of fact and conclusions of law. As the fact-finder, it was the Commission's prerogative "to impose an appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991). With the advent of restructuring and the abolition of the Tax Commission, however, such authority has devolved to the Administrative Law Judge Division. Currently, "all contested cases, as defined by Section 1-23-310 and as previously considered by the three [Tax] commissioners, shall be heard by an administrative law judge. . .." S.C. Code Ann. § 12-4-30(D) (Supp. 1996). An administrative law judge, as the fact-finder, must also determine an appropriate penalty based on the facts presented at the contested case hearing. Parties are entitled to present evidence on all issues arising out of the contested agency action. Additionally, the tribunal responsible for conducting the contested case proceeding has the authority to decide the issues based on the facts presented, and make the final decision on all the issues, including the appropriate penalty.

6. The Department seeks a penalty of $300.00 for each violation. I find that a more appropriate penalty to be assessed against the Respondent is the amount of $50.00 per machine for violating § 12-21-2802. Accordingly, I find that a total fine of $100.00 shall be assessed against the Respondent.


Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that, the Department shall impose a fine of One Hundred ($100.00) Dollars against Respondent for the violations of S.C. Code Ann. § 12-21-2802.




Administrative Law Judge

Post Office Box 11667

Columbia, South Carolina 29211-1667

November 20, 1997

Columbia, South Carolina

Brown Bldg.






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