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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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