Western Sav. & Loan Ass'n v. CFS Portales Ethanol I, Ltd., 17300

• Decision Date: 12 May 1988
• Docket Number: No. 17300,17300
• Citation: 754 P.2d 520,107 N.M. 143,1988 NMSC 38
• Parties: WESTERN SAVINGS & LOAN ASSOCIATION, an Arizona corporation, Plaintiff, v. CFS PORTALES ETHANOL I, LTD., a New Mexico limited partnership, et al., Defendants.
• Court: New Mexico Supreme Court

Page 520

754 P.2d 520

107 N.M. 143

WESTERN SAVINGS & LOAN ASSOCIATION, an Arizona corporation, Plaintiff, v. CFS PORTALES ETHANOL I, LTD., a New Mexico limited

partnership, et al., Defendants.

No. 17300.

Supreme Court of New Mexico.

May 12, 1988.

[107 NM 143] David S. Proffit, Albuquerque, for plaintiff.

Garrett & Richards, Michael T. Garrett, Clovis, for defendants.

OPINION

WALTERS, Justice.

Are twenty-five year leaseholds and the buildings constructed thereon, both of which served as security for construction loans to build those structures, within the meaning of "real estate" and thus subject to redemption after a foreclosure sale? That is the issue certified to us by Judge John E. Conway of the United States District Court for the District of New Mexico. Our opinion is confined strictly to the question certified.

Western Savings and Loan Association filed an action for judgment against CFS Portales Ethanol I on two promissory notes, and for foreclosure of the real estate mortgages and security agreements collateralizing those notes. The federal district court entered judgment for Western and ordered a foreclosure sale. Roger Pattison purchased the buildings and the leaseholds at the sale, subject to rights of redemption. R.C. Meyers, who had acquired the redemption rights from the liquidating trustee of CFS, served notice of redemption upon Pattison, and made a proper tender under NMSA 1978, Section 39-5-18. Pattison filed a rejection of tender; Meyers thereupon moved for a determination of property rights. The district court took the petition for redemption under advisement pending our ruling on the certified issue.

Petitioner Meyers argues that the leaseholds are real property, claiming that the controlling definition for real estate is found in the banking statute. See NMSA 1978, Sec. 58-1-21(C) (Repl.Pamp.1986). He takes a logically inconsistent position, however, by asserting that the legislature intended that secured transactions involving interests in land be governed by the law of real property. Meyers further asserts that the ethanol plants constructed with the proceeds from the notes secured by the mortgage also are real property, pointing to the mortgages as reflecting the parties' intent to treat the loans as real estate mortgages.

Pattison, on the other hand, contends that the banking law pertaining to loans with leaseholds as security has no bearing on the definition of real estate in regard to redemption. He emphasizes the parties' intent that the buildings be treated as personal property because the lessee and lessor provided for removal...