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9. In such lawsuit, judgment should be for
During the course of the harvest, a business invitee was injured by reason of a fault in the equipment used. Under applicable tort case law, the owner of the premises would be liable for the business invitee's injuries. The business invitee brought an appropriate action against the lender to recover damages for the injuries suffered, relying on this aspect of tort law.
The owner in fee simple of Orchardacres, mortgaged Orchardacres to a lender to secure the payment of a loan the lender made to the owner. The loan was due at the end of the growing season of the year in which it was made. The owner maintained and operated an orchard on the land, which was his sole source of income. Halfway through the growing season, the owner experienced severe health and personal problems and, as a result, left the state; his whereabouts were unknown. The lender learned that no one was responsible for the cultivation and care of the orchard on Orchardacres. The lender undertook to provide, through employees, the care of the orchard and the harvest for the remainder of the growing season. The net profits were applied to the debt secured by the mortgage on Orchardacres.
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B is correct. The lender was the mortgagee of Orchardacres. A mortgage conveys an interest in land as security for an obligation that the owner of that land owes to the creditor (the lender). The lender has certain rights prior to an action for default against the owner for the non-payment of the mortgage. The lender was aware that the owner had abandoned Orchardacres. As the mortgagee, the lender had the right to enter Orchardacres to correct a situation that would have created waste of the property via the loss of income from the abandoned crops. When the lender utilized their interest in Orchardacres by entering the property and running it, the lender took possession of the property subject to their interest in it as mortgagee. As such, the lender was in the position of an owner, not an agent, so the business invitee will prevail in his action.
A is incorrect. The primary effect of the different theories is their effect on a joint tenancy. A unilateral mortgage in a title theory state will sever a joint tenancy, while in a lien theory state the mortgage is not considered an alienation of interest and will not sever the tenancy, resulting in a tenancy in common. Likewise, the right to prevent waste is inferred from the mortgage and is not required to be an express term. It is implicit in the existence of the lender's interest in the property. Whether the state is a title or lien theory state will not affect the lender's ability to step in to prevent waste or to enjoin the owner from causing waste.
C is incorrect. The lender was not an agent of the owner. There are no facts in this question that suggest that the lender was acting on behalf of the owner's interest, or owed any fiduciary duties to the owner.
D is incorrect. This is the correct conclusion, but wrong legal reasoning. When the mortgagor abandons the premises and stops paying their mortgage, the mortgagee is entitled to take possession and administer the property to maintain the value of his security interest.