What could couse this to happed? After 12.000 street miles, no race with slicks, smallblock 340,8 3/4" clutch type sure grip.

I think the bearing seized. Zooming in to the bearing I see rust. Zooming in to the adjuster it looks like the outer race spun.

If it is a ladder bar or 4 link car I would check the rear end housing for being bent
I bent a 8 /34 housing horribly in my old pump gas street Duster with ladder bars, it ended up breaking the welds off of the passenger side ladder bar mount at the track on the starting line, THANK GOODNESS it din;t break furter down the track during that run
I used two carpenters square pressed up against the axle bearing ends and a steel tape measure 15 inches from the center of the housing both forward and behind the housing to see if they are bent now before using them

Whose cap is that? Did you put it together?

That doesn't look like a factory Dana/spicer suregrip , what brand is it ?

Looks like this one, https://www.doctordiff.com/8-3-4-clutch-type-sure-grip-powr-lok.html

The pictures are not the best resolution but the bearings spins freely and I do not see any wear on the bearings.

Not what I was expecting to see , I'd definitely be talking to Cass to figure out how that could happen.