The complaint states two causes of action. The first is for damages resulting from the diversion by defendant of certain carloads of grain the bills of lading for which plaintiffs held and had made advances upon. This cause of action rests upon tort. The second cause of action is for damages which plaintiffs suffered by reason of having made advances upon bills of lading issued by defendant which did not represent and never had represented any actual merchandise. This cause of action rests upon estoppel. (Bank of Batavia v. N. Y., L. E. & W. R. R. Co., 106 N. Y. 195.)
As to the second cause of action the referee dismissed the complaint on the ground that when plaintiffs made the advances upon the bills of lading comprised within that cause of action they had reason to believe, and must have known or believed, that the statements made in earlier bills of the same description were untrue, or, at least, had such knowledge or information as to put them upon inquiry as to the genuineness of the bills upon which they were making advances. He, therefore, concluded that such advances were not made in good faith, and in reliance upon the bills of lading, and consequently that plaintiffs were not entitled to the benefit of the rule stated in the Bank of Batavia Case (supra). With this conclusion we all agree.
The only question in the case upon which we are not agreed is as to the first cause of action upon which the referee has awarded judgment to the plaintiffs. The bills of lading upon which that cause of action is based did actually represent grain which had been received by defendant and was actually in its hands when plaintiffs made advances upon them. They thereby acquired a special property in the merchandise, and when defendant permitted this merchandise to be diverted into other hands it committed a conversion of plaintiffs’ property. This conversion it could justify only by showing actual consent or acquiescence on the part of plaintiffs and this defense it failed to establish. It may be, as defendant strenuously argues, that plaintiffs had knowledge that merchandise represented by other and earlier bills of lading upon which they had made advances had been diverted without their consent. But such knowledge falls far short of a consent *520to such diversion of the merchandise represented by the later bills. Of express consent to such diversion there is absolutely no evidence. The most that can be said is that there were certain circumstances relating to earlier transactions which should have aroused plaintiffs’ suspicions, and that as prudent men they should have refrained from dealing with bills of lading issued by defendant to Durant & Elmore, from whom plaintiffs received them. To uphold this defense would be equivalent to permitting a tort feasor to escape the consequences of his wrongdoing by pleading that his reputation was so bad that no one was justified in relying upon his representations. This is not the law. We are, therefore, of the opinion that the referee rightly disposed of both causes of action and the judgment is consequently affirmed, with costs.
Page and Smith, JJ., concurred; Clarke, P. J., and Davis, J., dissented.