SC Administrative Law Court Decisions

This matter comes before me pursuant to the Administrative Procedures Act, S.C. Code Ann. §§ 1-23-310 et seq. (1986 and Supp. 1997), upon a request for a contested case hearing by Respondent Charles M. Powell subsequent to the issuance by Petitioner Department of Revenue ("DOR") of a citation for having an unlicensed Class III video game machine, in violation of S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996). DOR seeks a fine of $2,500 for the violation. Respondent disputes violation and seeks a dismissal of the citation.

A contested case hearing was held in the matter at the Administrative Law Judge Division in Columbia, South Carolina, on October 2, 1998. Based upon the relevant and probative evidence and the applicable law, I find and conclude that Respondent did not violate S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996), and, therefore, dismiss the matter with prejudice.

DOR cited Respondent with violating S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996), which requires owners of Class III video poker machines to apply for and procure licenses for those machines. Accordingly, DOR bore the burden to prove that Respondent failed to apply for and procure a license for a Class III video game machine (serial no. 200466050596) ("subject machine") located at the Blythewood Oil Company, at the intersection of Highway 59 and Interstate 77.

DOR, however, produced no evidence to indicate that the subject machine was actually unlicensed. Petitioner, rather, attempted to show that no license was attached to the subject machine through testimony of SLED agents who indicated they were unable to find a license on the subject machine. The weight of the evidence establishes that the subject machine was licensed and that the license was attached to the side of the subject machine. The Respondent's case further explains why the license was not found by the SLED agents.

It is important to note that DOR cited Respondent for violation of S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) and not S.C. Code Ann. § 12-21-2726, which requires the conspicuous display of licenses for Class III video game machines. Because the DOR final determination did not allege that Respondent violated S.C. Code Ann. § 12-21-2726, whether or not Respondent violated that section is not properly before this tribunal.

By a preponderance of the evidence, I find:

1. Prior to January 21, 1997, the Respondent applied for and procured licenses for a Class III video game machine (serial no. 200466050596) and three other Class III video game machines located at the Blythewood Oil Company, at the intersection of Highway 59 and Interstate 77.
2. On January 21, 1997, agents of the South Carolina Law Enforcement Division ("SLED"), conducted an investigation of the Blythewood Oil Company to determine compliance with laws regulating Class III video game machines.
3. During the SLED investigation, the SLED agents inspected the subject machine and the three other Class III video game machines at the location.
4. The SLED agents determined that three of the video game machines had all licenses and signs as required by statute.
5. The SLED agents examined the subject machine but were unable to find a license affixed to it. The agents moved the subject machine during their inspection but did not pull the machine completely away from the wall and the adjoining machine.

1. The license for the subject machine was attached under a plexiglass cover on the lower left side of the machine.
2. The SLED agents failed to see the license attached to the subject machine because they did not pull the machine completely away from the wall and an adjoining machine, and their view was obscured.
3. Respondent was not present at the location during the SLED inspection.
4. Upon completion of their inspection, the SLED agents left a Preliminary Findings Report with an employee of the location and explained their findings.
5. The employee contacted Respondent by telephone, who arrived approximately thirty minutes after the inspection.
6. Although the SLED agents were unable to find a license for the subject machine during the inspection, a license was attached to the subject machine and secured under a plexiglass cover.
7. After the SLED agents left the location, Respondent telephoned one of the SLED agents to ask them to return to the location so that he could show them the license for the subject machine. The SLED agent declined Respondent's invitation to return to the Blythewood Oil Company.
8. Subsequently, Respondent removed the license and plexiglass cover from the side of the machine and attached it to the front of the machine.
9. DOR issued a final determination fining Respondent $2,500 for having one Class III machine unlicensed, in violation of S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996).

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

1. The Administrative Law Judge Division has jurisdiction to hear and decide this matter pursuant to the Administrative Procedures Act (APA), S.C. Code Ann. §§ 1-23-310 et seq. (1986 & Supp. 1997), S.C. Code § 12-4-30(D), and §§ 12-60-1310 through 12-60-1350 of the South Carolina Revenue Procedures Act (RPA).

1. The standard of proof in a contested case hearing is a preponderance of the evidence. National Health Corp. v. South Carolina Dep't of Health and Envtl. Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App. 1989).

3. As the party asserting the affirmative of an issue, the Petitioner bears the burden to prove the Respondent violated S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) by failing to apply for and procure a Class III license for the subject machine. See 29 Am. Jur. 2d Evidence § 127 (1994); Sanders, Neese, and Nichols, South Carolina Trial Handbook, § 9:3 (1994).

4. 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).

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

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 four 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. Respondent applied for and procured a Class III license for the subject machine before the SLED inspection and, therefore, was in compliance with S.C. Code Ann. § 12-21-2720(A)(3).

7. S.C. Code Ann. § 12-21-2726 (Supp. 1997) requires the conspicuous display of licenses for Class III video game machines.

8. It is improper to find a licensee guilty of misconduct not alleged in the complaint. Wilson v. State Bd. of Medical Examiners, 305 S.C. 194, 406 S.E.2d 345 (1991).

9. It is a denial of due process in an administrative proceeding to hold a licensee responsible for allegations not specifically made. Burdge v. State Bd. of Med. Examiners, 304 S.C. 32, 403 S.E.2d 114 (1991).

10. Because the DOR final determination did not allege that Respondent violated S.C. Code Ann. § 12-21-2726 (Supp. 1997), that issue is not properly before this tribunal.

11. 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(C).

IT IS THEREFORE ORDERED that the violation against Charles M. Powell, d/b/a World Games, be dismissed with prejudice.

AND IT IS SO ORDERED.

__________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

October 30, 1998

Columbia, South Carolina