ORDERS:
FINAL ORDER AND DECISION
I. Statement of the Case
The South Carolina Department of Revenue (DOR) seeks a penalty of $12,500 against Jimmy Martin (Martin) and the
revocation of five Class III licenses held by Martin. Martin opposes DOR's position and asserts he cannot be liable for a fine
or revocation since he is not the owner or operator of the five Class III machines at issue in this matter. This disagreement
places jurisdiction in the Administrative Law Judge Division (ALJD). S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1998). The hearing in this matter was held January 10, 2000 at the Edgar Brown Building, Columbia, South
Carolina. Based upon the evidence and the argument presented by the parties, Martin is neither liable for any penalty nor
subject to having his licenses revoked due to a failure to attach information identifying the owner or operator of the five
machines involved in this matter.
II. Issue
Is Martin liable for a penalty of $12,500 and for a revocation of five Class III licenses for failing to attach information
identifying the owner or operator of the five machines located at 724 E Wade Hampton Blvd., Suite G, Greer, South
Carolina?
III. Analysis
Owner Identification
1. Positions of Parties
DOR asserts the SLED Agents found no owner or operator identification on the five machines here in question. DOR
argues such a lack of identification is a violation warranting a $12,500 fine, $2,500 for each of the five machines, and a
revocation of each of the five licenses. Martin argues he is not liable for any violation since he is not the owner or operator
of the machines and thus had no duty to display their names on the machines.
2. Findings of Fact
Based on the preponderance of the evidence, the following findings of fact are entered:
On May 26, 1998, Jimmy L. Martin, d/b/a Jimmy L. Martin, a sole proprietor, acquired twenty-nine licenses for Class III
machines. Five licenses carried the separate but sequential license numbers of 3920766, 3920767, 3920768, 3920769, and
3920770.
The five licenses were affixed to five machines owned by Phillip C. Caldwell. Pursuant to an agreement dated August 31,
1998, the machines with attached licenses were made available for play by the public at 724 E Wade Hampton Blvd., Greer,
South Carolina.
The Greer location was not a location owned by Martin. Rather, a corporation of which Martin was an officer, Great Games
of North Augusta, Inc., leased the location from another party. The five machines at issue in this case were placed in Suite G
of the Greer location while the remainder of the location housed a bingo operation and at least fifteen other Class III
machines.
Even though the five machines in Suite G had licenses purchased and owned by Martin, the August 31, 1998 agreement gave
no portion of the proceeds of the machines to Martin. Instead, the agreement explained that the proceeds produced by the
machines were to be distributed between Caldwell, the machine owner, and Great Games, the location provider. Consistent
with the agreement, Caldwell received 22% of the "Net Earnings" produced by the machines while Great Games received the
remaining 78%.
As a part of its duties, the agreement charged Great Games with the tasks of carrying insurance on the machines to protect
against loss from damage or destruction. Further, consistent with the agreement, Great Games both monitored and
maintained the machines in proper working condition. In addition, Great Games collected the funds from the machines and
on the tenth of each month made payment to Caldwell of his 22% share.
While the written agreement set an expiration date of December 31, 1998, the parties continued to operate under the terms
of the agreement long after December 31, 1998. Indeed, the parties were still acting consistent with the terms of the
agreement on the date of the inspection by SLED, March 11, 1999.
On March 11, 1999, SLED Agents conducted an inspection of the video gaming machines at the Greer location with the
inspection including a determination of whether an owner or operator identification was displayed on the machines. No
owner or operator identification was displayed on the five machines in Suite G at the Greer location.
The SLED agent examined all parts of the machine and found no identification. Further, during the March 11, 1999
inspection, an employee of the location also examined each of the five machines and likewise found no owner or operator
identification. Finding no identification, the SLED agent issued the violation resulting in the matter being presented here.
3. Conclusions of Law
Based upon the above Findings of Fact, I conclude as a matter of law, the following:
Any person who owns or operates a Class III machine must have attached information identifying the owner or operator of
the machine. S.C. Code Ann. § 12-21-2748 (Supp. 1998). Failure to comply with the identification requirement "subjects
the violator to the applicable penalty and enforcement provisions of [Chapter 21] and Chapter 54 [of Title 12] as applicable.
Id. (Emphasis added). Thus, simply put, if a violation is established, the violator is penalized.
Here, the evidence demonstrates a violation of S.C. Code Ann. § 12-21-2748 (Supp. 1998) occurred. On the date of
inspection neither the SLED Agent nor the employee at the location found any owner or operator identification on the five
machines in question. Further, no other evidence establishes the presence of any owner or operator identification on any of
the five machines. Accordingly, on March 11, 1999, the five Class III video game machines located at 724 E Wade
Hampton Blvd., Suite G, Greer, South Carolina had no owner or operator identification attached to the five machines. Thus,
a violation has been proven.
Having found a violation, the plain language of the statute imposes a penalty upon the "violator." Greenville Hospital
System v. Provident Life & Accident Ins. Co., 330 S.C. 436, 499 S.E.2d 232 (Ct.App.1998) (a statute which is clear must
be read so as to apply its plain and unambiguous language). Since DOR seeks to impose the penalty upon Martin, the
remaining issue is whether Martin is the "violator."
Martin is not the "violator." Under the statute, the violator is the person who either owns or operates Class III machines
that fail to have the required information. The plain language identifies the owner or the operator as the party having the
duty to ensure that the machines "have attached . . . information identifying the owner or operator of the machine." §
12-21-2748. Further, the statute addresses the operator by warning that the operation cannot begin without the
identification since the "identification is a condition precedent before the machine may be operated on location." The warning
addressing the operation is then followed by the statement that failure to comply with "this requirement," i.e., placing
identification on the machines, "subjects the violator" to a penalty. Thus, the owner or operator is the violator.
Here, Martin holds only the licenses for the five machines in dispute in this case. He is neither the owner nor the operator of
the Class III machines.(1) Indeed, under the facts proven in this case, Martin did not purchase the machines, is not the lessee
of the machines, does not service or repair the machines, and does not insure the machines against loss. Further, there is no
evidence before me showing that Martin shares in any portion of the proceeds produced by the machines.
Because Martin individually, as the license holder, is the only party before me, I do not decide who, if anyone, is liable for
penalties for the failure to comply with S.C. Code Ann. § 12-21-2748 (Supp. 1998).(2) Rather, under the issues presented, I
decide that Martin, the only party before me, is not liable for the violation of S.C. Code Ann. § 12-21-2748 (Supp. 1998).
Having found that Martin is not the violator of S.C. Code Ann. § 12-21-2748 (Supp. 1998), it logically follows that his
licenses may not be revoked under S.C. Code Ann. § 12-54-90 (Supp. 1998). That provision explains that when a party
"fails . . . to comply with a provision of law" administered by DOR, that party is subject to having one or more licenses held
by that party revoked.
Here, Martin, the only party before me, did not fail to comply with the law since he held only a license and was not the
owner or operator. Thus, DOR has not proven in this case that Martin was a violator and therefore, DOR is unable to
revoke Martin's licenses under section 12-54-90.
Again, just as with the penalty side of this case, the only party before me is Martin in his individual capacity. Accordingly, I
do not decide who, if anyone, may be subject to license revocation under S.C. Code Ann. § 12-54-90 (Supp. 1998).
IV. Order
Based upon the Findings of Fact and Conclusions of Law, it is hereby ordered:
While a failure to attach information identifying the owner or operator of the five machines involved in this matter occurred,
Martin is not liable for any penalty resulting from such a violation since Martin was not the owner or operator of the
machines. Further, Martin's five licenses for these machines are not subject to revocation under S.C. Code Ann. § 12-54-90
(Supp. 1998).
AND IT IS SO ORDERED.
____________________________
RAY N. STEVENS
Administrative Law Judge
Dated: February 16, 2000
Columbia, South Carolina
1. No issue is before me on whether the license holder may place his license on a machine that he neither owns nor operates.
Rather, DOR has not challenged the structure involved here, and I make no determination on the propriety of the
arrangement.
2. The evidence does not allow me to determine whether Martin would have any individual liability as Vice President of Great
Games. |
