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. Michael Gault, d/b/a Mike Gault Racing Equipment & Etc., II

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Michael Gault, d/b/a Mike Gault Racing Equipment & Etc., II
 
DOCKET NUMBER:
97-ALJ-17-0393-CC

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

For the Respondent: Pro Se
 

ORDERS:

FINAL ORDER

STATEMENT OF THE CASE

This matter comes before me pursuant to S.C. Code Ann.§§ 1-23-310, et seq. (1986 & Supp. 1996) and 1-23-600 (E) (Supp. 1996), upon a request for a contested case hearing by Michael Gault, d/b/a Mike Gault Racing Equipment & Etc. ("Respondent"). Respondent was cited with an administrative violation of S. C. Code Ann. § 12-21-2802 (Supp. 1996) for allegedly failing to prominently display "penalty notices" on five (5) Class III video machines licensed under S. C. Code Ann. § 12-21-2720 (Supp. 1996). The South Carolina Department of Revenue ("Department") seeks an order from this tribunal finding that five (5) violations occurred on January 21, 1997 at 703 Cherokee Avenue, Gaffney, South Carolina ("location"). Further, it seeks a fine of Three Hundred ($300.00) Dollars for each violation for a total penalty of One Thousand ($1,500.00) Dollars.

The Respondent denies the alleged violations and contests the citation. He argues that the "penalty notices" were displayed at each of the five machine locations.

After timely notice to the parties, a contested case hearing was held at the Anderson County Courthouse, Anderson, South Carolina, on October 15, 1997.

Based upon a thorough review of the record and of the testimony and evidence presented at the hearing, I conclude that the Respondent violated the provisions of S.C. Code Ann. § 12-21-2802 (Supp. 1996) and find that a fine in the amount of One Hundred ($100.00) Dollars per machine is proper under the circumstances in this case.

EVIDENCE

Without objection, Petitioner placed into evidence the following exhibits:

Exhibit 1: Final Determination Letter dated June 30, 1997;

Exhibit 2: Letter of Respondent dated July 7, 1997 requesting a contested case hearing;

Exhibit 3: Preliminary Findings Report for Video Gaming dated January 21, 1997,

prepared by SLED agent J. R. Owen;

Exhibit 4: Respondent's application for coin-operated devices/machines;

Exhibit 5: Respondent's application for a business license;

Exhibit 6: S. C. Rev. Procedure 97-2;

Exhibit 7: Copy of the "penalty sign" required by S. C. Code Ann. § 12-21-2802.

FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing and taking into account the credibility of the witnesses, accuracy of the evidence and reviewing all of the exhibits carefully, I make the following findings by a preponderance of the evidence:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to both parties.

3. Respondent operates a lounge called Mike Gault Racing Equipment & Etc. at 703 Cherokee Avenue, City of Gaffney, York County, South Carolina.

4. On January 21, 1997, at approximately 11:30 a.m., an inspection was conducted at this location by SLED agents Jerry R. Owen and Robbie Jones.

5. At the time of the inspection there were five (5) Class III video machines with license numbers 041936, 041194, 041923, 041919 and 041950 inside the lounge at the location.

6. The two SLED agents introduced themselves to Gene Meadows, the manager at the lounge, upon their entry and explained to him the purpose of the visit. A lady was behind the bar at the time, a young man was playing a video arcade machine and another gentleman was playing a video poker machine. All the machines at the lounge were plugged into an electrical socket and were operational.

7. SLED agents Owen and Jones, accompanied by the manager Gene Meadows, conducted an inspection of the Class III video machines in the lounge to determine if they had the "penalty notice" posted either on the machines or on the wall behine the machines. Neither of the agents nor Mr. Meadows observed the notice on the five machines or on the wall behind the machines.

8. SLED agent Jerry R. Owen wrote up a "Findings Report" and left a copy with the manager, Gene Meadows, who acknowledged its receipt.

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 poker 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. S. C. Code Ann. § 12-21-2802 (Supp. 1996) provides:

Each machine licensed under this article 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.

4. "Prominent" is defined by The American Heritage College Dictionary, 3d ed. at p. 1095, as something "[i]mmediately noticeable; conspicuous."

5. S. C. Code Ann. § 12-21-2720 (A)(3) (Supp. 1996) provides as follows:

(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 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.

6. S. C. Code Ann. § 12-54-40 (b)(3) (Supp. 1996) provides:

(b) There must be added to and become a part of the tax imposed by the tax or revenue laws, and collection as such:

(3) 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.

(Emphasis added).

Respondent is liable to obtain licenses for these 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.

7. Where a statute is clear and unambiguous, there is no room for construction and the terms of the statute must be given their literal meaning. Southeastern Fire Ins. Co. v. South Carolina Tax Comm'n, 253 S.C. 407, 171 S.E.2d 355 (1969); Green v. Zimmerman, 269 S.C. 535 S.E.2d 323 (1977).

8. It is impossible for reasonable minds to differ as to the proper interpretation of S.C. Code Ann. § 12-21-2802 (Supp. 1996). That statute requires in unambiguous language that a "penalty notice" must be posted at each Class III video poker machine or on the wall behind the machine. After a thorough examination of the five Class III video machines at issue in this case and the wall behind them, no "penalty notice" signs were found.

9. The Department seeks a penalty of Three Hundred ($300.00) Dollars for each violation. It argues that S. C. Code Ann. § 12-54-40 (b)(3) (Supp. 1996) authorizes a penalty of not less than Fifty ($50.00) Dollars nor more than Five Hundred ($500.00) Dollars for the failure by the Respondent to comply with § 12-21-2802 and that $300.00 is the appropriate penalty per machine violation.

10. I find and conclude that a more appropriate penalty to be assessed against the Respondent is the amount of One Hundred ($100.00) Dollars per machine for violating § 12-21-2802. This was the first inspection at the location and was the first time Respondent was alleged and found to be in violation of any provision of the "Video Game Machines Act" or the "Coin-Operated Machines and Devices and Other Amusements Act". After the inspection by the SLED agents, within several hours Respondent had the "penalty notices" posted at each machine location.

Accordingly, I find and conclude that a total fine in the amount of Five Hundred ($500.00) Dollars is assessed against Respondent.

ORDER

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

ORDERED that the Respondent shall pay a fine to the Department in the amount of Five Hundred ($500.00) Dollars for the violations of S. C. Code Ann. § 12-21-2802 on January 21, 1997.

AND IT IS SO ORDERED.

.

_______________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

October 29, 1997


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