Opinion ID: 2221338
Heading Depth: 1
Heading Rank: 4

Heading: Invalid Lease Under SDCL 43-32-2

Text: [¶ 14.] SDCL 43-32-2 states in part: No lease or grant of agricultural land for a longer period than twenty years, in which shall be reserved any rent or service of any kind, shall be valid. The Reuers contend that their lease fits squarely within the language of this statute: the agreement created an invalid thirty-year contractual right to lease the land. [¶ 15.] We examined this statute, and specifically the term agricultural land, in Ryan v. Sioux Gun Club, 68 S.D. 345, 2 N.W.2d 681 (1942): the statute should be construed so as not to apply to leases of land even though suitable for agriculture, when leased for a purpose other than agriculture, and exclusive of the right of agriculture. Id. at 683. The lease here provides that the land may be used for any legal purpose, including ... agricultural, hunting and fishing, and any other related purpose. As agricultural use was not excluded, and in fact was specifically authorized, the statute applies to this land. See Trauger v. Helm Bros., Inc., 279 N.W.2d 406, 411-12 (N.D.1979) (under a substantially similar statute, if lease is fairly interpreted to limit use of land to nonagricultural purposes, lease violating time limit not invalid). [¶ 16.] Contracts are construed to carry out valid contractual relations rather than interpreted to render them invalid or impossible to perform. Kuhfeld v. Kuhfeld, 292 N.W.2d 312, 315 (S.D.1980) (citations omitted). Our review of the contract shows that the parties intended to create a lease agreement with options to renew for two separate ten-year periods. Leaving the second ten-year option intact would make the entire lease invalid, but as we have just determined, it may be severed from the contract. Therefore, while this is an agricultural lease in which rent or services are reserved, the term is not of a length prohibited by the statute after the second ten-year option is severed. [¶ 17.] The Reuers point to the structure of the statute, emphasizing that it states [n]o lease ... for a period of longer than twenty years, shall be valid. This they compare to other states' restrictions, such as Iowa's, which provides: No lease or grant of agricultural lands, reserving any rent, or service of any kind, shall be valid for a longer period than twenty years. Iowa Const. art. I, § 24. They argue that under the language of Iowa's restriction, if a lease is structured to run for longer than the time allowed, the excess may be severed, bringing the lease into conformance. South Dakota's statute, on the other hand, appears to require that any lease purporting to exceed twenty years is unconditionally invalid. While there is some merit to this interpretation under Christensen, 535 N.W.2d at 857-58, we need not reach it because of our disposition on the issue of severance. [¶ 18.] As stated in Ryan, [o]ur statute... undoubtedly found its source in New York, which had a constitutional provision dating back to the Constitution of 1846, and identical in language except that the period fixed is twelve years instead of ten. Ryan, 2 N.W.2d at 682 (noting that South Dakota's prohibition at the time was for periods longer than ten years). In Parthey v. Beyer, 228 A.D. 308, 238 N.Y.S. 412 (1930), the parties had a five year agricultural land lease, and later created another lease on the same property, to take effect when the original lease expired. The second lease provided for a $25 per month increase in rent, and gave the lessee the option to buy the property within three years. Id. at 414. New York's Constitution, art. 1, sec. 13 stated: No lease or grant of agricultural land for a longer period than twelve years, hereafter made, in which shall be reserved any rent or service of any kind, shall be valid. Id. at 413. The court held that the entire second agreement, including the option to buy, was invalid, but the original lease was valid because its terms did not violate the state's constitution. Id. at 415. [¶ 19.] We hold that the second ten-year renewal period may be severed from the agreement, and that the original lease period, as well as the first ten-year renewal period, do not violate our prohibition against leases of agricultural land for longer than twenty years. See Rezatto, 311 N.W.2d at 56. [¶ 20.] Affirmed. [¶ 21.] MILLER, Chief Justice, and SABERS and GILBERTSON, Justices, concur.