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Even though coal supply contracts are contracts for the sale
of goods covered by article 2 of the Uniform Commercial Code, the
obligation of Santa Fe or its successors to sell unsevered coal
in the future may also qualify to be treated as the transfer of
an interest in land. See N.M. Stat. Ann. sec. 55-2-107(1). In
other words, classification of the two supply contracts as
contracts for the sale of goods in the future by N.M. Stat. Ann.
section 55-2-107(1), does not preclude those contracts from also
effecting a transfer of an interest in real property under New
Mexico law. See also 1 Restatement, Contracts 2d, sec. 127, cmt.
b & c (1981).
2. Creation of Servitudes
The TEPCO and WEF coal supply contracts created servitudes
under New Mexico law. The modern view is that servitudes may be
created by contract. See Cafeteria Operators, L.P. v. Coronado-
Santa Fe Associates, L.P., 952 P.2d 435, 441 (N.M. Ct. App.
1997); 1 Restatement, Property 3d (Servitudes), sec. 2.1(1)(a),
reporter’s note (2000).
Although he disputes that the supply contracts created
servitudes under New Mexico law, respondent acknowledges that the
servitudes (stemming from the seller’s obligation to mine and
supply coal from the Lee Ranch mine property to the
buyer/utility) involve affirmative covenants. See 1 Restatement,
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