ORDERS:
ORDER AND DECISION
STATEMENT OF THE CASE
This matter is before this tribunal for a contested case hearing pursuant to S.C. Code Ann.
§§ 1-23-310, et seq. (Supp. 1996) and S.C. Code Ann. § 12-4-30(D) (Supp. 1996) on an alleged
administrative violation. The South Carolina Department of Revenue alleges that on October 28,
1996, Respondents violated S.C. Code Ann. § 12-21-2804(A) by applying for, receiving,
maintaining, or permitting to be used permits for the operation of more than five machines
authorized under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) at a single place or premises.
Specifically, the Department alleges a violation of the "one separate employee" requirement of 27
S.C. Code Ann. Regs. 117-190 (Supp. 1996).
For the alleged violation of § 12-21-2804(A), the Department seeks a $5,000 fine against
each Respondent, revocation of twenty-five Class III video game machine licenses located at
Treasure Land Video on October 28, 1996, and preclusion of the use of any Class III video game
machine licenses at the five businesses located within Treasure Land Video for six months.
The hearing of this matter was held at 9:00 a.m. on January 16, 1998.(1) The issues before this
tribunal are (1) whether Respondents violated S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code
Ann. Regs. 117-190 (Supp. 1996) and, (2) if so, what is the proper penalty for the violation. Based
upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that Edwin
Alewine and Tina Alewine violated S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs.
117-190 (Supp. 1996) by utilizing video game machine licenses in contravention of these laws.
Consequently, the licenses shall be revoked. No video game machine licenses shall be utilized in
Rooms A, C, D, E, and F of Treasure Land Video for a period of six months from the date of
revocation of the licenses. Further, the Department shall impose a fine of $5,000 each against
Respondents Edwin Alewine and Tina Alewine.
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:
- On October 28, 1996, the Department's agents, Gary Reinhart and John C. Tanner
conducted an inspection of the video gaming businesses located at 2110 Main Street, Columbia,
South Carolina. After completion of the inspection that day, the agents issued Respondents an
administrative citation for a violation of the "single place or premises" requirement of S.C. Code
Ann. § 12-21-2804(A) (Supp. 1996) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996).
- At the time of the inspection, the facts relating to the "single place or premises"
requirement of § 12-21-2804(A) and Regs. 117-190 were as follows:
- Treasure Land Video was a mall-type structure consisting of six separate
rooms containing video gaming machines.
- The main entrance into the structure opened into a common area.
- One payout counter was located in the common area.
- All of the businesses were open and contained operational Class III video
game machines which were available for play. Customers were playing
machines in several of the rooms.
- Two employees were present in the building. Frank Jones was stationed
behind the payout counter and Vivian Johnson was in Game Room B, as
illustrated in Petitioner's Exhibit # 4. Edwin Alewine and Tina Alewine
arrived at the location after the inspection was completed, and while the
agents were completing the preliminary findings reports.
- Each of the video gaming businesses had separate retail sales tax licenses.
See Petitioner's Exhibit # 7.
- On October 28, 1996, the following Class III licenses were affixed to the machines
in the rooms as designated on Petitioner's Exhibit #s 1 and 8 and held by the corresponding
licensees:
Business Entity |
License Number |
Licensee |
Room A |
044914 |
Great Games, Inc. |
|
3810324 |
Edwin Alewine |
|
3810323 |
Great Games, Inc. |
|
044605 |
Great Games, Inc. |
|
044623 |
Great Games, Inc. |
Room C |
045506 |
Tina Alewine |
|
044617 |
Great Games, Inc. |
|
044627 |
Great Games, Inc. |
|
3810330 |
Great Games, Inc. |
|
3810336 |
Great Games, Inc. |
Room D |
045513 |
Tina Alewine |
|
044597 |
Great Games, Inc. |
|
044635 |
Great Games, Inc. |
|
044634 |
Great Games, Inc. |
|
044656 |
Great Games, Inc. |
Room E |
045517 |
Tina Alewine |
|
045521 |
Tina Alewine |
|
045063 |
Edwin Alewine |
|
045508 |
Tina Alewine |
|
044739 |
Tina Alewine |
Room F |
045504 |
Tina Alewine |
|
045516 |
Tina Alewine |
|
045505 |
Tina Alewine |
|
044740 |
Edwin Alewine |
|
043921 |
Edwin Alewine |
- Respondents Edwin Alewine and Tina Alewine hold the retail licenses for the
businesses referenced above.
- Sufficient evidence was not proffered by the Department to establish that Respondent
Great Games, Inc. managed or operated the video game businesses located at Treasure Land Video.
Further, insufficient evidence was presented to establish that Great Games, Inc. applied for, received,
maintained, or permitted to be used Class III video game machine licenses in contravention of § 12-21-2804(A).
- The Department seeks a $5,000 fine against each Respondent, revocation of twenty-five Class III video game machine licenses located at Treasure Land Video on October 28, 1996, and
preclusion of the use of any Class III video game machine licenses at the five business locations for
a period of six months from the date of revocation.
CONCLUSIONS OF LAW AND ANALYSIS
- Jurisdiction
- 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.
- Burden of Proof
- In civil cases, generally, the burden of proof rests upon the party who asserts the
affirmative of an issue. 29 Am. Jur. 2d Evidence § 127 (1994); Alex Sanders, et al., South Carolina
Trial Handbook § 9:3 Party With Burden, Civil Cases (1994). The Department is the party asserting
the affirmative in this case; therefore, the Department must prove by a preponderance of the evidence
that Respondents violated § 12-21-2804(A) and Regs. 117-190 by failing to have a separate
employee in the businesses which are the subject of this case. 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, supra, § 9:5 Quantum of Evidence in Civil Cases (1994), (citing Frazier
v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955)).
- Single Place or Premises Violation
- Respondents Great Games, Inc., Edwin Alewine, and Tina Alewine are the licensees
of the Class III video game machines licensed under S.C. Code Ann. § 12-21-2720(A)(3) (Supp.
1996), which are the subject of this case.
- Respondents Edwin Alewine and Tina Alewine are the operators of the Class III video
game machines located in Treasure Land Video, which are the subject of this case.
- The Video Game Machines Act ("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). The purpose of the Act is to regulate the
video game machines industry and to prevent large-scale casino type gambling operations in the
State of South Carolina. See Reyelt v. South Carolina Tax Comm'n, Nos. 6:93-1491-3 and 6:93-1493-3 (D.S.C. Nov. 15, 1993); See also Op. Att'y Gen. 94-21 at 51 (1994).
- Petitioner alleges that on October 28, 1996, Respondents violated § 12-21-2804(A)
and Regs. 117-190 by applying for, receiving, maintaining, or permitting to be used permits for the
operation of more than five machines authorized under § 12-21-2720(A)(3) 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).
- On June 23, 1995, regulations were promulgated which further clarify the provisions
of the Video Game Machines Act, and, as such, these regulations have the force and effect of law.
See Young v. South Carolina Dep't of Highways and Pub. Trans., 287 S.C. 108, 336 S.E.2d 879
(1985); Faile v. South Carolina Employment Sec. Comm'n, 267 S.C. 536, 230 S.E.2d 219 (1976).
Specifically, Regulation 117-190 was promulgated to clarify the meaning of the phrase "single place
or premises" as set forth in § 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 firewalls 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 firewalls
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 firewalls 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 busin22ess 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 Ann. Regs. 117-190 (Supp. 1996) (emphasis added).
- The first issue before this tribunal is whether any person applied for, received,
maintained, or permitted to be used permits for the operation of more than five machines authorized
under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) at a single place or premises, in violation
of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996).
- It is well established that in interpreting a statute, the court's primary function is to
ascertain the legislative intent. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); First South
Sav. Bank, Inc. v. Gold Coast Assocs., 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. South Carolina 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., Inc. 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). "[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 (1953); See also
Savannah Bank & Trust Co. of 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 Smith v. Wallace, 295 S.C. 448, 369 S.E.2d 657 (Ct. App. 1988).
It should be emphasized that S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) clearly precludes
any person, not just the licensees, from applying for, receiving, maintaining, or permitting to be used
permits for the operation of more than five Class III video game machines in a single place or
premises. The term person is not defined in the Act, but its common and ordinary meaning clearly
encompasses an individual or a business entity as well as a licensee or machine owner. See Black's
Law Dictionary 1142 (6th ed. 1995). Further, § 12-21-2804(A) mandates that the Department revoke
the licenses of machines located in an establishment that fails to meet the requirements of this
section. Hence, § 12-21-2804(A) mandates revocation of the licenses so used, even if the licensee
was not directly involved in applying for, receiving, maintaining, or permitting its licenses to be used
in contravention of the statute. Such an interpretation is consonant with the plain language of the
statute.
- The facts of this case clearly indicate that there were at least thirty operational Class
III video game machines located in the various rooms of Treasure Land Video. Each room contained
five operational licensed Class III video game machines. The evidence further indicates that all
rooms were open for business at the time of inspection. One employee was situated within Room
B during the inspection. However, no employees were situated in any of the remaining rooms.
Respondents Edwin Alewine and Tina Alewine arrived at the location after the conclusion of the
inspection on October 28, 1996.
- There is sufficient evidence to establish that Edwin Alewine and Tina Alewine
permitted licenses to be used in contravention of the statute, S.C. Code Ann. § 12-21-2804(A), which
prohibits the operation of more than five Class III video game machines within a single place or
premises. However, the Department did not present sufficient evidence to establish that Respondent
Great Games, Inc. applied for, received, maintained, or permitted to be used permits for the operation
of more than five machines authorized under § 12-21-2720(A)(3) at a single place or premises, in
violation of § 12-21-2804(A) and Regs. 117-190.
Under § 12-21-2804(A), a license on a video game machine must be revoked by virtue of its
misuse under the Act, whether the actual violator is the licensee, machine owner, or lessee.
However, a monetary fine under § 12-21-2804(F) may only be imposed on the actual person directly
involved in the violation of § 12-21-2804(A). When applying for a license, a licensee violates the
statute if he applies for a license to be used in the operation of more than five machines at a single
place or premises to violate the statute. The statute does not state, as the Department would like this
tribunal to construe it, that a person who applies for a license which is subsequently used for the
operation of more than five machines at a single place or premises is in violation of the statute. In
the instant case, as the operators of the businesses and the licensees of most of the Class III machines
located therein, Respondents Edwin Alewine and Tina Alewine unequivocally violated the video
gaming statute by their day-to-day operation and maintenance of the businesses. The Department
has not established, however, that Respondent Great Games, Inc. violated the statute when applying
for licenses or that it was involved in the operation and maintenance of the businesses.
- Whether an establishment is being operated as a "single place or premises" is
determined by evaluating the facts against the standard set forth in Regulation 117-190. With respect
to the "employee" requirement, Regulation 117-190 requires that each entity or business have at least
one separate employee on the premises of that respective entity or business during business hours
to comply with the "single place or premises" requirements of § 12-21-2804(A).(2)
If a game room containing operational Class III video game machines is accessible to
customers and no employee is present in that room, the room is being operated in violation of § 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). This application is consistent with the
intent of the General Assembly to prevent large-scale casino type gambling. See Singletary v. South
Carolina Dep't of Educ., 316 S.C. 153, 447 S.E.2d 231 (Ct. App. 1994), citing State v. Thrift, 312
S.C. 282, 440 S.E.2d 341 (1994) (legislative intent must prevail if it can be reasonably discovered
and language of a statute must be construed in the light of the intended purpose of the statute).
- The weight and credibility assigned to evidence presented at the hearing of a matter
is within the province of the trier of fact. See South Carolina Cable Television Ass'n v. Southern
Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Furthermore, a trial judge, who
observes a witness, is in the better position to judge the witness's demeanor and veracity and evaluate
their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260
S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct. App. 1985);
Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).
- Respondents Edwin Alewine and Tina Alewine have failed to meet the "one separate
employee" requirement set forth in Regulation 117-190 with regard to the Rooms A, C, D, E, and
F in Treasure Land Video. Failure to comply with any portion of Regulation 117-190 constitutes a
violation of the single place or premises requirements of S.C. Code Ann. § 12-21-2804(A) (Supp.
1996). Consequently, twenty-five of the thirty Class III video game machine licenses at Treasure
Land Video, in the rooms designated herein, are subject to revocation.
- Penalty
- Section 12-21-2804(A) expressly authorizes the "commission" [Department] to
enforce the provisions of this section and also requires the Department to revoke licenses utilized
in a fashion that fails to comply with the provisions of this section.
- Section 12-21-2804(A) provides that the penalty for exceeding the maximum number
of video game machines permitted in a single place or premises requires the revocation of the
licenses of machines located in the establishment.
- Section 12-21-2804(A) further provides: "No license may be issued for a machine
in an establishment in which a license has been revoked for a period of six months from the date of
revocation." The clear meaning of this language precludes the utilization of new licenses for a six
month period after an establishment has had a license revoked. Hence, as twenty-five of the current
thirty licenses have been revoked and no new licenses may be utilized in Rooms A, C, D, E, and F
at this location, the five businesses must cease operations for six months. The Department does not
issue licenses for specific locations, but rather to individuals. Therefore, licenses may be utilized
by an operator at any, otherwise qualified, location in the State. Consequently, the above provision
would be rendered meaningless if it were read not to require an establishment whose licenses have
been revoked to cease operations for six months. See Singletary v. South Carolina Dep't of Educ.,
316 S.C. 153, 447 S.E.2d 231 (Ct. App. 1994), citing State v. Thrift, 312 S.C. 282, 440 S.E.2d 341
(1994) (legislative intent must prevail if it can be reasonably discovered and language of a statute
must be construed in the light of the intended purpose of the statute).
- S.C. Code Ann. § 12-21-2804(F) (Supp. 1996) provides that a person who violates
S.C. Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000 (emphasis added). The
Department seeks a $5,000 fine against Great Games, Inc., the licensee of some of the machines in
question. However, the Department has not established that Great Games, Inc. applied for, received,
maintained, or permitted to be used permits for the operation of more than five machines authorized
under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) at a single place or premises. See Stacks
v. South Carolina Dep't of Revenue and Taxation, 95-CP-40-0239 at 8-9 (C.P. Richland County
April 20, 1995).
Under § 12-21-2804(A), a license on a video game machine must be revoked by virtue of its
misuse under the Act, regardless if the violator is the licensee, machine owner, or lessee. However,
a monetary fine under § 12-21-2804(F) may only be imposed on the person directly involved in the
violation of § 12-21-2804(A). In this case, the Department only presented sufficient evidence to
establish that Respondents Edwin Alewine and Tina Alewine were directly involved in violating the
Act.
ORDER
Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY
ORDERED that, as mandated by S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), the Department
shall revoke the twenty-five (25) video game machine licenses referenced herein, located at Treasure
Land Video, 2110 Main Street, Columbia, South Carolina on October 28, 1996.
IT IS FURTHER ORDERED that no Class III video game machine licenses shall be
utilized in Rooms A, C, D, E, and F at Treasure Land Video for a period of six months from the date
of revocation of the licenses.
IT IS FURTHER ORDERED that the Department shall impose a fine of $5,000 each
against Respondents Edwin Alewine and Tina Alewine.
IT IS FURTHER ORDERED that the imposition of a $5,000 fine against Great Games,
Inc. must fail.
IT IS FURTHER NOTED that 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
January 21, 1998
Columbia, South Carolina
1. At the hearing of this matter, counsel for Respondents moved for a continuance. The
motion was denied. For a complete understanding of the procedural history of this case, see
South Carolina Dep't of Revenue v. Alewine, 97-ALJ-17-0550-CC, (December 29, 1997)
(vacated January 14, 1998) pages 2-4; and Order Granting Motion for Reconsideration and
Vacating Order and Decision in South Carolina Dep't of Revenue v. Alewine, 97-ALJ-17-0550-CC, (December 29, 1997) (January 14, 1998).
2. Regulation 117-190 has been held to be "valid and enforceable and a valid exercise of
the power of the . . . Department." McNickel's, Inc. v. South Carolina Dep't of Revenue, 96-CP-07-1072 (C.P. Beaufort County June 6, 1997); See also AAA Entertainment Corp. v. South
Carolina Dep't of Revenue, 96-CP-07-1595 (C.P. Beaufort County June 6, 1997); Scurry v. South
Carolina Dep't of Revenue, 97-CP-07-0408 (C.P. Beaufort County June 6, 1997). The one
separate employee requirement of Regulation 117-190 was specifically considered in each of
these decisions and held to be a valid exercise of legislative authority. Id. |