Did South Carolina counties have to refund video poker license fees after the machines became illegal?

Plain-English summary

Spartanburg County asked whether it had to refund part of video poker machine license fees collected for a period extending beyond July 1, 2000, when operating those machines became illegal. Operators had paid the county fee at the start of the license period, which ran to June 30, 2001.

The June 2001 informal opinion said no prorated county refund was required. The legislation that ended video poker expressly provided a prorated refund of certain Department of Revenue license fees, but did not provide one for county fees. The AG also discussed the general rule against recovering fees voluntarily paid without a statutory right. The answer expressly assumed that licensees paid voluntarily and had no separate refund agreement with the county.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

County revenue officials

The letter found no statutory requirement for Spartanburg County to return the local fee merely because the machine could no longer be operated for the remainder of the license term. It distinguished the state-collected fee refund in Act No. 125 of 1999.

Former licensees

The opinion’s conclusion depended on voluntary payment and the absence of an independent refund agreement. It said the prospect that video poker would be outlawed was especially clear to people who bought licenses after the referendum law took effect.

Common questions

Did the state’s refund provision cover county video poker fees? A: No. The AG said the legislation provided a refund for certain fees paid to the state Department of Revenue but omitted county fees.

Did the unused months on a county license create a required refund? A: The opinion said no on the stated facts, assuming the fee had been paid voluntarily and there was no separate refund agreement.

Would an agreement to refund the fee matter?
A: Yes. The AG expressly limited its no-refund conclusion to a situation without an independent refund agreement.

Background and statutory framework

The letter considered the county license fee under §12-21-2720(D) and the Department of Revenue refund in Act No. 125 of 1999. It also reviewed cases treating gaming licenses as revocable privileges and voluntary fee payments as generally unrecoverable without a statutory or agreed refund right.

Citations and references

• §12-21-2720(D): county video poker license fee.
• Act No. 125 of 1999: state-collected fee refund provision discussed by the AG.

Official title

Concerning if, under South Carolina Law, Spartanburg County is required to grant a pro-rata refund of county video poker license fees for the period between the date the operation of video poker machines became illegal and the license expiration date.

Requester

Edwin C. Haskell, III, Esquire

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/june-22-2001/
• Original PDF: https://www.scag.gov/wp-content/uploads/2013/11/01june-22-haskell.pdf

Original opinion text

1111

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The State of South Carolina

OFFICE OF THE ATTORNEY GENERAL
CHARLIE CONDON
ATTORNEY GENERAL

June 22, 200 I

Edwin C. Haskell, III, Esquire
Assistant County Attorney, Spartanburg County
218 East Henry Street
Spartanburg, South Carolina 29306

Re: Your Letter of March 2, 2001
S.C. Code Ann. §12-21-2720(D)
Dear Mr. Haskell:
In your above referenced letter, you request an opinion from this Office as to the following question: Under South Carolina Law, is Spartanburg County required to grant a pro-rata refund of county video poker license fees for the period of July 1, 2000, the date the operation of video poker machines became illegal in South Carolina, to June 30, 2001 , the license expiration date? By way ofbackground, you indicate that "Spartanburg County has recently received a request for a pro-rata refund of cenain video poker license fees which were imposed pursuant to §12-212720(D), Code of Laws of South Carolina, 1976, as amended. The claim for pro-rata refund is for the period of July 1, 2000, to June 30, 2001, and is based upon video poker machines being declared illegal as of July 1, 2000, and the licenses in issue having a June 30, 2001, expiration date. The entire amount of the Spartanburg County video poker license fee is paid at the beginning of the license period." You have researched the issue and, while recognizing the existence of an argument to the contrary, have indicated that "it would appear that there is no legal authority which would require Spartanburg County to refund the county video license fees in question." South Carolina Code Ann. § l 2-21-2720(A) provides, in pertinent part, that Every person who maintains for use or permits the use of, on a place or premises occupied by him, [a video poker machine] 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
... four thousand dollars for each [video poker] machine ...

REMBERT C . DENNIS BUILDING

pMB hit c-v~J

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POST OFFICE Box

11549

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COLUMBIA, S.C. 29211-1549

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TELEPHONE: 803-734-3970

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FACSIMU..E: 803-253-6283

Mr. Haskell
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June 22, 2001

Subsection (D) of§ 12-21-2720 provides that"[a] county may by ordinance impose a license fee on [video poker] machines licensed pursuant to subsection (A)(3) of this section located in an unincorporated area of the county in an amount not exceeding ten percent of three thousand six hundred dollars of the license fee imposed pursuant to subsection (A) for the equivalent license period."

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As you noted, the General Assembly, in Part VI, Section 23(D) of Act No. 125 of 1999 provided that "if [the provision making video poker machines unlawful] takes effect, the South Carolina Department of Revenue, upon application, shall refund any person holding a license for the operation of video game machines, on a pro rata basis, the portion of any license fee previously paid to the department for licenses that extend beyond June 30, 2000." The General Assembly did not, however, make such a provision for the license fees imposed by counties pursuant to §12-212720(D). In your request, you provided the general law that you have relied on in making your assessment in this matter. The following is a brief synopsis of that law:

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"There is no fundamental right to gamble." The South Carolina Department of Revenue and Taxation v. Rosemary Coin Machines, Inc., 331 S.C. 234, 500 S.E.2d 176 (S.C. App. 1998) (reversed on other grounds); See also Army Navy Bingo, Garrison No. 2196 v. Plowden, 281S.C.226, 314 S.E.2d 339 (1984). A "property owner operating in a highly regulated field [such as video poker industry] cannot assert a reasonable expectation that governmental regulation will not be altered to his detriment ... [w]here [as in the video poker industry] the regulatory climate renders an owner's investment-backed expectations unreasonable, ... " the making of video poker machine possession illegal will not result m an unconstitutional taking. Westside Quick Shop, Inc. v. Stewart, 341 S.C. 297, 534 S.E.2d 270 (2000). A license "is a permit, good as against existing laws, but subject to further legislative and constitutional control or withdrawal." Stone v. Mississippi, 101 U.S. 814, 25 L.Ed. 1079 ( 1879). "A license is merely a permit or privilege to do what otherwise would be unlawful, and is not a contract between the authority, federal, state, or municipal granting it and the person to whom it is granted; neither is it property or a property right, nor does it create a vested right; nor is it taxation." Heslep v. State Highway Department of South Carolina, 171S.C.186, 171 S.E. 913 (1933). A license is "subject to withdrawal at will ... [t]he licensee has in legal effect nothing more than a license to enjoy the privilege on the terms named for the specified time, unless it is sooner abrogated by the sovereign power of the State ... [and] ... [t]his is the general rule notwithstanding the expenditure of money by the licensee in reliance thereon ... " South Carolina Department of Revenue and Taxation v. Rosemary Coin Machines, Inc., supra. "The license confers no property right. It is a permit issued

Mr. Haskell
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June 22, 2001

pursuant to the State's police power." Army Nayy Bingo, Garrison No. 2196 v. Plowden, supra.

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The case law listed above clearly supports your initial position that there is an absence of authority requiring the return of the license fees collected by Spartanburg County pursuant to §12-212720. Further supporting such a position !s the common law in the area of refunds for illegally or mistakenly collected taxes and fees. Generally, the voluntary payment of a tax or fee made pursuant to an assessment later declared illegal may not be recovered. City of Rochester v. Chiarella, 448 N.E.2d 98 (N.Y. App. 1983). This general proposition has also been stated this way: "[t]he general rule .. .is that in the absence of a statute to the contrary, a person who has paid a license fee or tax which is illegal or in excess of the sum which might lawfully be exacted cannot recover back the amount paid or the illegal excess, if the payment was made voluntarily with full knowledge of the facts, although it was made in good faith, through a mistake or in ignorance of the law, unless the recovery is permitted by an agreement entered into at the time the payment was made." Manufacturer's Casualty Ins. Co. v. Kansas City, 330 S.W.2d 263 (Mo. App. 1959). See also YY1fil Assoc. v. Mayor and Alderman of the City of Annapolis, 483 A.2d 1263 (Md. App. 1984) (Common-law rule is that in the absence of statute authorizing refund, taxes, fees or other governmental charges voluntarily paid under mistake oflaw cannot be recovered back); Coca-Cola Company v. Coble, 234 S.E.2d 477 (N.C. App. 1977) (Generally, voluntary payment of tax is not recoverable even if tax unconstitutional); Universal Film Exchanges, Inc. v. Board of Finance and Revenue, 185 A.2d 542 (Pa. 1962) (In absence of statute, state need not allow recovery of taxes or other moneys voluntarily, but erroneously paid); Bray v. Department of State, 341 N. W.2d 92 (Mich. 1983) (State not liable to uninsured motorist for refund of uninsured motor vehicle registration fee following enactment of mandatory insurance act midway through registration year). I have found no authority which would indicate that the general rule of law concerning the refunds in question is not applicable in South Carolina. In fact, the General Assembly's including in Act 125 of 1999 a pro rata refund provision for the license fees collected by the Department of Revenue would seem to indicate that the lawmakers were aware of the general rule as well. It would further seem logical to assume that, had the General Assembly intended to allow for a similar refund of fees collected by counties pursuant to§ 12-21-2720(D), they would have specifically included such in the legislation. See Crowder v. Carroll, 251S.C.192, 161S.E.2d235 (1968) (any legislation which is in derogation of the common law must be strictly construed and not extended in application beyond the clear legislative intent). Moreover, there is additional authority which would indicate that those persons purchasing the two-year license after July 2, 1999, are entitled to no refund of the fee. Act 125of1999, calling for the referendum which could have ultimately lead to the outlawing of video poker, became effective on July 2, 1999. "The continuing legality of [video poker] therefore became completely speculative" at that time and there could be no "reasonable expectation" that the licenses would remain viable for the entire two-year period. Mibbs v. South Carolina Department of Revenue, 33 7 S.C. 601, 524 S.E.2d 626 (1999). While Mibbs does not change the status of those purchasing

Mr. Haskell
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June 22, 2001

licenses prior to July 2, 1999, it clearly works against those persons seeking a refund for licenses issued after that date (particularly those who purchased licenses after October 14, 1999 when the Supreme Court issued its ruling leading to the banning of video poker all together).

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As there appears to be no statutory authority for a refund of the license fee in question, it is my opinion that Spartanburg County is not "required to grant a pro-rata refund of county video poker license fees for the period of July 1, 2000, the date the operation of video poker machines became illegal in South Carolina, to June 30, 2001, the license expiration date." This opinion is also based on the assumption that the fees were paid voluntarily by the licensees and that there was no independent agreement for a refund between Spartanburg County and the licensees. This letter is an informal opinion only. It has been written by a designated Assistant Attorney General and represents the position of the undersigned attorney as to the specific question asked. It has not, however, been personally scrutinized by the Attorney General and not officially published in the manner of a formal opinion.

Assistant Attorney General
DK.A/an

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