Joytime Distrib. & Amusement v. State

Decision Date14 October 1999
Docket NumberNo. 25007.,25007.
Citation528 S.E.2d 647,338 S.C. 634
PartiesJOYTIME DISTRIBUTORS AND AMUSEMENT CO., INC., Plaintiff, v. The STATE of South Carolina, Defendant.
CourtSouth Carolina Supreme Court

Frank L. Eppes and L. Lee Plumblee, of Eppes & Plumblee, P.A., of Greenville, for plaintiff.

Attorney General Charles Molony Condon, Assistant Deputy Attorney General Robert D. Cook, Senior Assistant Attorneys General Nathan Kaminski, Jr., and Kenneth P. Woodington, Assistant Attorney General Christie Newman Barrett, and Assistant Deputy Attorney General J. Emory Smith, Jr., all of Columbia, for defendant.

James B. Richardson, Jr., of Richardson & Birdsong, of Columbia, and J. Boone Aiken, III, of Aiken, Nunn, Elliott & Tyler, P.A., of Florence, for Amicus Curiae PedroLand, Inc. Reginald I. Lloyd, Counsel to the House Judiciary Committee, and Charles F. Reid, Counsel to the Speaker of the House, both of Columbia, for Amicus Curiae David H. Wilkins.

PER CURIAM:

This matter is pending in the Court's original jurisdiction. Plaintiff (Joytime) is a South Carolina corporation engaged in the video gaming industry with gaming machines located in several South Carolina counties. Joytime seeks a declaration as to the constitutionality of Act No. 125, 1999 S.C.Acts. Joytime asserts that Part II of Act 125 is an unconstitutional delegation of power by the legislature to the voters of this State and asks the Court to enjoin the enforcement of Act 125. The State has filed a brief contending that Act 125 is constitutional and, if not, the Act is severable. We agree with Joytime that Part II of Act 125 is unconstitutional but hold the portion of Act 125 which constitutes an unconstitutional delegation of power is severable from the remainder of the Act.

Facts and Proceedings

Because the General Assembly was unable to agree on comprehensive video gaming legislation, the Governor, by Executive Order, called an extra session of the General Assembly to meet on Tuesday, June 29, 1999. Executive Dep't, State of South Carolina, Exec.Order No. 99-192 (signed by Governor James Hovis Hodges). During that extra session, the General Assembly enacted Act 125, which was ratified on July 1, 1999, and signed by the Governor on July 2, 1999.

Act 125 is legislation relating to video gaming machines and is composed of six parts. Part I prohibits cash payouts on video gaming devices effective July 1, 2000. Part II requires that a referendum be held "to ascertain whether or not video game machine payouts will continue to be allowed in this State." Act 125, Part II, § 9(1), 1999 S.C.Acts. The specific question voters are asked to consider is: "Shall cash payouts for credits earned on video game machines continue to be allowed after June 30, 2000?" Act 125, Part II, § 9(2), 1999 S.C.Acts. Part III provides for regulation of the video gaming industry if the referendum called for in Part II results in a majority "yes" vote. Part IV deals with gambling losses and civil actions. Part V includes a severability clause, a savings clause, and an intent section, and Part VI states the effective dates of the various parts and certain specific sections of the Act.

Joytime initiated this action on September 2, 1999, alleging that Act 125 is violative of the South Carolina Constitution. Prior to the expiration of the time for answering the complaint, the Attorney General petitioned this Court to hear the matter in its original jurisdiction. By order dated September 24, 1999, the Court granted the Attorney General's petition and ordered an expedited briefing schedule. The Court also granted the petitions of PedroLand, Inc., a South Carolina Corporation which owns and operates Class III video game machines (video poker machines) at locations in Dillon County, South Carolina, and David H. Wilkins, Speaker of the South Carolina House of Representatives, to appear as amici curiae.

Having considered the briefs and appendices filed with the Court, and the arguments of the parties at the hearing in this matter, we discuss the questions of whether Joytime has standing to bring this matter, whether the referendum constitutes an unlawful delegation of the legislature's power, whether portions of Act 125 are severable, whether it is proper for this Court to issue an injunction, and whether the surcharge on license fees is valid.

Standing

PedroLand, as amicus curiae, asserts that Joytime does not have standing to prosecute this action. PedroLand contends that Joytime has not alleged an injury to differentiate it from the general public. We disagree.

Standing to sue is a fundamental requirement in instituting an action. A private individual may not invoke the judicial power to determine the validity of an executive or legislative act unless the private individual can show that, as a result of that action, a direct injury has been sustained, or that there is immediate danger a direct injury will be sustained. Ex parte Levitt, 302 U.S. 633, 58 S.Ct. 1, 82 L.Ed. 493 (1937); Blandon v. Coleman, 285 S.C. 472, 330 S.E.2d 298 (1985). Moreover, the injury must be of a personal nature to the party bringing the action, not merely of a general nature which is common to all members of the public. Citizens for Lee County v. Lee County, 308 S.C. 23, 416 S.E.2d 641 (1992).

In this case, Joytime is required by Part II, § 9(4) of Act 125 to pay a license surcharge to fund the referendum. Further, Act 125 will directly affect Joytime's business. Part I of Act 125 bans video gaming machines as of July 1, 2000. Part III of Act 125 provides for more extensive regulation and taxation than that in effect when Act 125 was adopted and requires Joytime to connect to a central monitoring system.

Although this action is of general interest to all members of the public, in our opinion, Joytime has alleged an injury which is sufficiently personal to confer standing.

Unconstitutional Delegation of Power

Joytime contends that the legislature unconstitutionally delegated its power to enact laws by enacting Part II of Act 125. We agree.

This Court has a very limited scope of review in cases involving a constitutional challenge to a statute. All statutes are presumed constitutional and will, if possible, be construed so as to render them valid. Davis v. County of Greenville, 322 S.C. 73, 470 S.E.2d 94 (1996). A legislative act will not be declared unconstitutional unless its repugnance to the constitution is clear and beyond a reasonable doubt. Westvaco Corp. v. South Carolina Dep't. of Revenue, 321 S.C. 59, 467 S.E.2d 739 (1995). A legislative enactment will be declared unconstitutional only when its invalidity appears so clearly as to leave no room for reasonable doubt that it violates a provision of the constitution. Id.

Article III, § 1 of the South Carolina Constitution states:

The legislative power of this State shall be vested in two distinct branches, the one to be styled the "Senate" and the other the "House of Representatives" and both together the "General Assembly of the State of South Carolina."

The Constitution of 1868 had an identical clause and had an additional provision, Art. I, § 41, which stated: "The enumeration of rights in this constitution shall not be construed to impair or deny others retained by the people and all powers not herein designated are reserved for the people." In 1873, this Court was called upon to construe the two sections and stated the following:

The true effect of this declaration [Art. I, § 41] is that it reserves to the people whatever is not granted by the instrument; as, for instance, the right to make changes in the form of government is not granted, and, under this clause, remains in the hands of the people, capable of exercise when they may see fit so to do. As the legislative power is granted in express terms, importing a grant of general powers, such general powers of legislation cannot be regarded as reserved to the people under this section. Such general language as that contained in section 41 of article 1 cannot be allowed such force and effect as to change entirely the nature of the legislative power, and to introduce anomalous ideas in the structure of the government.

State v. Hayne, 4 S.C. 403, 421 (1873) (emphasis added). The present South Carolina Constitution does not have a reserve clause similar to Art. I, § 41, and, since the constitution does not contain a specific provision reserving to the people the power to legislate, in our opinion, Art. III, § 1 requires the legislature, not the people, to enact the general law.

Direct Legislation

In a direct democracy, the people are given the power to legislate directly. Direct legislation by the people may consist of initiatives by petition, referenda, and recalls. With initiatives by petition, a certain percentage of the voters of a state may propose by petition that a constitutional amendment or general law be enacted. If the subject matter of the initiative is not enacted by the lawmaking body, it must be submitted to the voters for ratification. A referendum is a vote by the people of the state as to whether to accept or reject a measure passed by the lawmaking body of that state. A recall allows the electors of a state to end the term of an elected official's office before its expiration date. William Munro, The Initiative Referendum and Recall, 1-2 (1912). Direct legislation grants the voters the option to propose legislation and decide state-wide policy issues themselves. It is direct democracy as opposed to representative democracy. David B. Magleby, Direct Legislation (1984).

However, Article III, § 1, of the South Carolina Constitution provides for a representative form of government in this state as opposed to a direct democracy. In Opinion of the Justices (Tax Plan Referendum), 725 A.2d 1082 (N.H. 1999), the New Hampshire Supreme Court considered whether a bill which proposed to allow the voters to...

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