## Facts

- In 1984, Viable Resources, Inc. and St. Joe American Corporation formed a joint venture to develop mining prospects in Lawrence County, South Dakota.
- In 1985, Viable deeded 90 mining claims (about 944 acres) to St. Joe, whose successor was LAC Minerals (USA), LLC.
- The joint venture agreement allowed LAC to identify portions of the property that lacked mineral-development potential and stated LAC “will reassign any such portions” back to Viable.
- The agreement also contained a general clause permitting assignment of the parties’ rights.
- Robert G. Fowler later acquired Viable’s interests under the agreement and in the property.
- Fowler requested that LAC release and reassign land not needed for mining; LAC stated it was evaluating what could be released but made no determination and no reassignment.
- Fowler sued asserting an entitlement to reassignment and asserting a continuing interest in the property; LAC counterclaimed to quiet title, asserting Fowler had no surviving or transferable property interest.

## Issues

1. Whether the agreement and related deed created a property interest (a condition subsequent/right of repossession or reversion) rather than only a contractual covenant.
2. Whether, under South Dakota law and the parties’ agreement, any grantor’s right of repossession/reversion was transferable to Fowler.
3. Whether LAC was entitled to quiet title free of Fowler’s asserted continuing reversionary interest.

## Decision

- The Eighth Circuit affirmed the judgment for Fowler.
- The court held South Dakota law did not preclude transfer of the grantor’s right of repossession to Fowler.
- The court upheld the determination that Fowler retained an ongoing reversionary interest in the property.
- LAC’s counterclaim to quiet title free and clear of Fowler’s interest was properly denied.
- The court agreed that LAC’s failure, at that time, to reassign portions of the property was not a present breach, but that conclusion did not eliminate Fowler’s continuing property interest.

## Legal Principles

- Contract and conveyance language can create a continuing property interest tied to a specific purpose (including a right of repossession/reversion for land not needed for that purpose), not merely a covenant enforceable only by damages.
- Under South Dakota law, a grantor’s right of repossession/right of reentry is not categorically nonassignable; it may be conveyed to a successor absent a prohibiting rule.
- A broad assignment clause in the governing agreement supports transfer of the grantor’s retained future interest and allows a successor to assert that interest against the grantee’s successor.
- A determination that no present breach occurred does not, by itself, extinguish a retained future interest where the triggering condition and the retained right remain operative.

## Conclusion

The Eighth Circuit held that the transaction reserved a continuing reversionary interest in the grantor’s successor and that South Dakota law permitted that interest to be assigned to Fowler, defeating LAC’s effort to quiet title free of the retained interest.


Fowler v. LAC Minerals (USA), LLC, 694 F.3d 930 (8th Cir. 2012)