Citation. 368 N.W.2d 819 (S.D. 1985)
Facts. The case arose from a South Dakota state action concerning the University of South Dakota at Springfield. By legislative action, South Dakota attempted to redesignate the institution and divert the related endowment lands and funds to other state purposes. Beneficiaries and affected parties sued, arguing that the school-trust provisions of the South Dakota Constitution did not permit the redesignation as the state had attempted it.
Holding. The South Dakota Supreme Court held that the school-trust provisions of the South Dakota Constitution create a “special, permanent and perpetual trust” over all lands, money, property, and proceeds donated to the state for educational institutions — whether the donation came from the United States or from private donors — and that the state is the trustee. The court further held that legislative action attempting to dispose of trust assets in a manner inconsistent with the constitutional trust framework was unlawful, and that the trustee’s restoration obligation extended to making the trust whole for any past deviations.
Why it matters. Kanaly sits alongside Washington’s Skamania (1984) and Utah’s Plateau Mining (1990) and NPCA v. Board of State Lands (1993) as one of the foundational mid-1980s and early-1990s state-supreme-court articulations of trust-lands doctrine. Three things make it particularly important.
The perpetuity formulation is unusually direct. Many courts have held that the school trust is permanent. The South Dakota court’s language is more emphatic than most:
That these provisions create a special, permanent and perpetual trust of all land, money, property, and proceeds of the same, donated to the state for educational institutions by the United States and individuals alike and that the state is the trustee is beyond question.
The phrase “beyond question” is doing real work. It signals the court’s view that the perpetuity is not a matter on which reasonable judicial disagreement is possible.
The restoration remedy is operative. The court did not merely declare the diversion unlawful; it required restoration. This matters for contemporary cases because the principle that the trustee must make the trust whole for past breaches — not merely cease future breaches — is one that trust-lands defendants regularly resist. Kanaly is one of the cases plaintiffs reach for when the question is whether the relief should be prospective only or whether it should extend to restoring what was taken.
The corpus is broad. “All land, money, property, and proceeds of the same” — not just the land itself, not just the original federal grant, but everything that has flowed into the trust corpus from any source over time, including private donations. The breadth matters because trustees who wish to characterize portions of the trust as ordinary state property routinely attempt to narrow the corpus to the federal-grant lands alone. Kanaly says: the corpus is everything that has come in.
How Kanaly fits the broader case-law map. Kanaly is part of the South Dakota doctrinal line that begins with Schelle v. State (1957, blocking a creative principal-impairment scheme), runs through Matthews v. State (1959, enforcing the public-auction substance over its form), Fox v. State (1977, protecting fair-market-value lease pricing), and includes Kanaly itself, Olson (2009 reaffirmation), and the 1997 administrative-cost-loophole opinion. South Dakota is widely regarded — including in the Library’s Schools of the Republic — as the state with the most reliably-enforced school-trust doctrine in the country, and Kanaly is one of the central reasons.
Cited in. South Dakota trust-lands jurisprudence; cited as persuasive authority by courts in other states for the perpetuity formulation and for the breadth-of-corpus principle. Reaffirmed and extended in subsequent South Dakota Supreme Court decisions including the 2009 Olson line.
Limits of this annotation. This entry is a scholarly summary, not a Shepardized citation analysis, and is not a substitute for current legal research. The quoted passage above is taken from Margaret Bird’s 2022 TrustLaw compendium and should be verified against the official reporter before being relied on in any current filing. Drafted from the Bird 2022 TrustLaw compendium as part of Site update v91 — CLASS Archive integration. Last updated: 2026-05-25.
