## Facts

- Thunderstik Lodge, Inc. and its principals leased agricultural land from the Reuers for hunting use under a written lease executed May 6, 1988, after arm’s-length negotiations with counsel for both sides.
- The lease provided an initial 10-year term (March 1, 1988–Feb. 29, 1998) and two separate 10-year renewal options (1998–2008 and 2008–2018) with increased annual rent for each renewal period.
- The lease included a severability clause stating that if any portion was invalid or unenforceable, the remainder would remain enforceable to the fullest extent permitted by law.
- Around the same time, Thunderstik purchased five acres from the Reuers to build a “first class hunting lodge.”
- South Dakota law barred agricultural leases longer than 20 years; the Reuers asserted the lease was an unlawful 30-year agricultural lease.

## Issues

1. Whether a lease with a 10-year term plus two 10-year renewal options violates the statutory 20-year maximum for agricultural leases.
2. If the second 10-year renewal option is unlawful, whether it can be severed so the original term and first renewal option remain enforceable.

## Decision

- The Supreme Court affirmed the circuit court’s judgment.
- The second 10-year renewal option (2008–2018) was invalid because it would extend the agricultural lease beyond the statutory 20-year limit.
- The unlawful second renewal option was severable, leaving an enforceable lease consisting of the original 10-year term plus the first 10-year renewal (20 years total).

## Legal Principles

- A contract term that violates a statutory limit may be excised if the agreement is divisible and the unlawful provision is not inseparable from the lawful exchange.
- A contract is divisible when (1) the parties’ performances can be separated into corresponding pairs of part performances and (2) each pair reflects equivalent value.
- Distinct time periods with separate consideration (including different rent for each renewal period) support divisibility of a lease’s term provisions.
- A severability clause is strong evidence that the parties intended enforceability of the lawful remainder when a discrete provision is invalid, so long as enforcement is consistent with statute and public policy.
- A court may reject arguments that the entire agreement is void where the record shows arm’s-length bargaining and no scheme to evade the statute, and the illegal portion can be removed without rewriting the lawful bargain.

## Conclusion

The court held that the lease’s second 10-year renewal option violated the 20-year statutory cap for agricultural leases, but enforced the lawful 20-year remainder because the lease was divisible by term and expressly severable.


Thunderstik Lodge, Inc. v. Reuer, 613 N.W.2d 44 (S.D. 2000)