Peabody Natural Resources Company, f.k.a. Hanson Natural Resources Company, Cavenham Forest Industries, Inc., A Partner Other Than The Tax Matters Partner - Page 11

                                       - 11 -                                         
          to the buyer/utility.  Respondent also points out that under                
          neither contract did the utility have the right to go onto the              
          Lee Ranch land and extract coal.  Instead, respondent contends              
          Peabody had to mine and supply the coal required by the utility’s           
          power plant.  Accordingly, respondent concludes that the supply             
          contracts are not real property but contracts to sell personal              
          property.  See Townsend v. State ex rel. State Highway Dept., 871           
          P.2d 958, 959 (N.M. 1994) (observing that though mineral-in-place           
          interests constitute real property, the underlying minerals are             
          transformed into personal property when the mineral or physical             
          substance is severed from the land).                                        
               C.  Analysis of Coal Supply Contracts Under New Mexico Law             
               We begin our analysis by noting that the supply contracts              
          are contracts for the sale of goods under New Mexico law.  In               
          addition, each contract created a servitude obligating Santa Fe             
          and subsequent owners of the Lee Ranch mine to extract and supply           
          coal to the power plant.  We conclude that under New Mexico law,            
          the supply contract servitudes constitute real property                     
          interests, for reasons we will discuss.                                     
                    1.  Status as Contracts for the Sale of Goods                     
               Minerals in place (i.e., minerals lying unworked beneath or            
          on the surface of the land) are considered part of that land, and           
          an interest in minerals in place is real property for purposes of           
          New Mexico law.  Interests in minerals in place can be separately           






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  Next

Last modified: May 25, 2011