Peabody Natural Resources Company, f.k.a. Hanson Natural Resources Company, Cavenham Forest Industries, Inc., A Partner Other Than The Tax Matters Partner - Page 12

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          conveyed to and held by someone other than the owner of the                 
          surface estate.  After the minerals are severed and removed from            
          the land, they become personal property.  See generally id. at              
          959; 58 C.J.S., Mines and Minerals, sec. 141 (1998).                        
               As pertinent to this case, New Mexico has adopted section 2-           
          107 of the Uniform Commercial Code, which addresses minerals to             
          be severed from realty by the seller.  In pertinent part, N.M.              
          Stat. Ann. section 55-2-107 (Michie 1993) provides:                         
               Sec. 55-2-107.  Goods to be Severed from Realty;                       
               Recording                                                              
               (1) A contract for the sale of minerals or the like                    
                    (including oil and gas) *  *  * to be removed from                
                    realty is a contract for the sale of goods within                 
                    this article if they are to be severed by the                     
                    seller but until severance a purported present                    
                    sale thereof which is not effective as a transfer                 
                    of an interest in land is effective only as a                     
                    contract to sell.                                                 
               *     *     *     *     *     *     *                                  
               (3) The provisions of this section are subject to any                  
                    third party rights provided by the law relating to                
                    realty records, and the contract for sale may be                  
                    executed and recorded as a document transferring                  
                    an interest in land and shall then constitute                     
                    notice to third parties of the buyer’s rights                     
                    under the contract for sale.                                      
          Accordingly, the TEPCO and WEF coal supply contracts are                    
          contracts for the sale of goods under New Mexico law.3                      


               3N.M. Stat. Ann. sec. 55-2-106(1) (Michie 1993) and sec.               
          2-106(1) of the Uniform Commercial Code each define a “contract             
          for sale” to include both a present sale of goods and a contract            
          to sell goods in the future.                                                




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