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Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. NJS Social & Recreational Club, d/b/a Ironhead's Lounge & Grill

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
NJS Social & Recreational Club, d/b/a Ironhead's Lounge & Grill
 
DOCKET NUMBER:
98-ALJ-17-0491-CC

APPEARANCES:
Jeff Nelson, Esquire
For Petitioner

James H. Harrison, Esquire
For Respondent
 

ORDERS:

ORDER AND DECISION

This matter comes before this tribunal pursuant to Respondent's request for a contested case hearing. The Department of Revenue issued a Final Agency Determination on July 23, 1997 alleging that Respondent failed to post penalty signs to, or on the wall behind, three video poker machines, in violation of S.C. Code Ann. § 12-21-2802. After notice to the parties, a hearing was conducted on October 14, 1998.

The issues before this tribunal are (1) whether Respondent violated S.C. Code Ann. § 12-21-2802 (Supp. 1997) and (2) if so, what is the proper penalty for such violations. Based upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that Respondent committed three violations of S.C. Code Ann. § 12-21-2802. The total penalty shall be $600 for all three violations.



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:

  1. On July 17, 1997, Respondent operated and maintained a three-station Blackjack video game machine licensed under S.C. Code Ann. § 12-21-2720 at 2817 Business Highway 17, Garden City, South Carolina.
  2. On July 17, 1997, South Carolina Law Enforcement Division (SLED) Agent P. A. Williamson inspected the video poker machines at this business and determined that the Blackjack machine 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. 1997).
  3. On July 17, 1997, SLED Agent Williamson issued a Preliminary Findings Report for Video Gaming to Respondent's attendant, which set forth three alleged violations of § 12-21-2802 for failure to display a penalty sign for each station of Respondent's Blackjack machine.
  4. Respondent is listed on the business tax application as the owner of the establishment. (Petitioner's Exhibit # 2).
  5. On July 23, 1997, the Department issued a citation to Respondent for three violations of § 12-21-2802 and it assessed a $900 penalty against Respondent.


CONCLUSIONS OF LAW AND ANALYSIS

  1. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1997) and S.C. Code Ann. § 1-23-320 (Supp. 1997), the Administrative Law Judge Division has jurisdiction to hear this case.
  2. S.C. Code Ann. § 12-21-2802 (Supp. 1997) 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 shows that Respondent did not display any signs on the wall above the

Blackjack machine, nor did Respondent affix signs prominently to each station of the machine.

  1. 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 his 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).
  2. It is a generally recognized principle of administrative law that the fact-finder has the authority to impose an administrative penalty, as established by the legislature, after the parties have had an opportunity to have a hearing and be heard on the issues. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991).
  3. 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. 1997) (emphasis added). Respondent is responsible for obtaining 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.
  4. I find that Respondent committed three violations of § 12-21-2802 by failing to display a sign on the wall above or affix signs to each station of the Blackjack machine in question. Section § 12-21-2802 requires that a separate sign be displayed for each station of a multi-player machine. This tribunal reaches this conclusion for three reasons. First, § 12-21-2802 provides that "[e]ach machine licensed under this article or Article 19 must have a prominently displayed sign . . . ." (Emphasis added). A multi-player machine is licensed under Article 19, § 12-21-2720(A)(3). Because each station of a multi-player machine must be licensed pursuant to § 12-21-2720(C), each station is considered a machine for licensing purposes. Therefore, each such machine is required to have a penalty sign.

Second, the practical, underlying purpose of the statute is to put each player on notice of the penalties for tampering by prominently displaying the penalty sign on the wall above each machine or affixing it thereto. This is especially pertinent as a player at one station of a multi-player machine could conceivably not be in a position to see a single sign placed on another station. The placement of a penalty sign at each station removes any doubt about notice to the player.

Finally, the General Assembly certainly could have amended § 12-21-2802 when it amended § 12-21-2720(C) in 1995 to count each station as a machine if it did not intend multiple placement of penalty signs at a multi-player machine.(1) This is especially true since the plain language of § 12-21-2802 encompasses the machines licensed under § 12-21-2720(C). See Berkebile v. Outen, 311 S.C. 50, 426 S.E.2d 760 (1993) (there is a basic presumption that the legislature had knowledge of previous legislation when later statutes are passed on a related subject).

The Department seeks a penalty of $300 for each of the alleged violations. I find that a more appropriate penalty to be assessed against Respondent is a total of $600.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that, the Department shall impose a fine of $600 against Respondent for its violations of § 12-21-2802 as described herein.

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

October 26, 1997

Columbia, South Carolina

1. 1995 Act. No. 145, Part II, § 67C2, effective July 1, 1995.


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