In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 07-2581

WELLS FARGO BANK, N.A.,

Plaintiff-Appellant,

v.

PAUL SIEGEL,

Defendant-Appellee.

____________

Appeal from the United States District Court 

for the Northern District of Illinois, Eastern Division.

No. 05 C 5635—Samuel Der-Yeghiayan, Judge.

____________

ARGUED JANUARY 22, 2008—DECIDED SEPTEMBER 2, 2008

____________

Before EASTERBROOK, Chief Judge, and WOOD and SYKES,

Circuit Judges.

WOOD, Circuit Judge. Ty-Walk Liquid Sales, Inc., provided products and marketing services to farmers. Unfortunately, it fell on hard times and closed its doors on

August 23, 2001, leaving behind millions of dollars of debt

that it owed to Wells Fargo Bank, N.A. The debt was

secured by, among other things, Ty-Walk’s accounts

receivable, and one of those accounts was with defendant
2 No. 07-2581

Paul Siegel. When it could not collect from Ty-Walk, Wells

Fargo turned to Siegel to collect the monies Siegel owed

to Ty-Walk under an oral contract. After a bench trial,

the district court concluded that the scope of the agreement was not as broad as Wells Fargo believed, and thus

that Wells Fargo could not recover against Siegel. Wells

Fargo appeals; we affirm.

I

Over the years, Wells Fargo loaned a substantial amount

of money to Ty-Walk, which was in the business of selling

fertilizer, chemicals, and various farming services, including a grain-marketing program through which Ty-Walk

tried to help grain producers obtain the best price for

their production. At times, the program included trading

in grain futures.

One of Ty-Walk’s customers was Paul Siegel, who has

been a farmer since the mid-1970s. Siegel’s relation with

Ty-Walk began in the early 1990s, when he attended

several meetings at Ty-Walk’s facilities about grain marketing and trading. Siegel also had face-to-face discussions

about grain-marketing strategies with Ty-Walk’s CEO,

John C. (“Buzz”) Gibbons. Frequently giving informal

sales pitches to farmers at breakfast meetings, annual

dinners, barbeques, and the like, Gibbons was the face and

engine of Ty-Walk. Around 1995 Siegel decided to move

his business to Ty-Walk, because it charged a lower

commission than the company he had been using. At

first Siegel simply bought fertilizer and chemicals from TyWalk; soon he began to participate in its marketing pro-
No. 07-2581 3

gram. It is undisputed that at that time, Siegel and Gibbons

(speaking for Ty-Walk) entered into an oral contract that

set the terms of Siegel’s participation in the program. The

point of contention is whether that agreement included

Siegel’s authorization for Ty-Walk to trade futures on his

behalf.

Siegel kept his business with Ty-Walk for six years, until

Ty-Walk ceased operations on August 23, 2001, and Wells

Fargo sued to recover the millions that Ty-Walk owed

on its loans. Wells Fargo’s suit in the Circuit Court of

Kendall County resulted in an order granting it possession

of the collateral on those loans. That order may have

ended one phase of the litigation, but it marked the

beginning of a new one: Wells Fargo’s collection efforts.

One step Wells Fargo took was to send a letter to Siegel,

demanding that he pay Wells Fargo $380,525.32, the

balance that Wells Fargo alleged was due on Siegel’s

marketing-program account. The letter further demanded

that Siegel pay another $50,785.16, the amount that Wells

Fargo said was due on a loan that Siegel took out from the

Commodity Credit Corporation (“CCC”), a U.S. government agency that loans money to farmers using commodities as collateral. Both parties agree that Ty-Walk

paid off the CCC loan on Siegel’s behalf in September 2000.

The question remaining is whether Siegel repaid TyWalk for its discharge of that debt: Wells Fargo says no;

Siegel says yes.

When Siegel ignored its payment demand, Wells Fargo

initiated this lawsuit in federal district court, invoking the

court’s diversity jurisdiction. It claimed that Siegel had
4 No. 07-2581

breached his contract with Ty-Walk by failing to pay TyWalk the sums due under his marketing-program

account and his CCC loan, and (by virtue of the state court

order) that Siegel now owed those sums to Wells Fargo.

The complaint, filed in September 2005, also asserted a

third claim, based on approximately $20,000 in goods and

services that Ty-Walk allegedly provided to Siegel but

for which Siegel had not paid. After discovery, Wells

Fargo moved for summary judgment on each claim. The

district court denied the motion for the counts based on

the marketing-program account and the CCC loan, but

granted it with respect to the claim for $20,000 in goods

and services. Siegel’s post-trial motion challenging the

$20,000 judgment against him was denied; he paid the

amount due on that claim.

Wells Fargo’s remaining two claims proceeded to a bench

trial, which took place on April 23-24, 2007. Wells Fargo

did not produce a single witness who could testify about

the formation of any contract, verbal or otherwise, between

Ty-Walk and Siegel. Instead, the bank relied primarily

on documentary evidence, including Ty-Walk’s financial

records and accounting books, audit letters, and commodity statements sent to Siegel purportedly reflecting the

status of his account. It also introduced more than 200

documents evidencing individual transactions between

Siegel and Ty-Walk over the course of their six-year

business relations. Wells Fargo argued that these documents provided conclusive proof that Siegel and Ty-Walk

had an oral agreement, and that the agreement included

Siegel’s authorization for Ty-Walk to engage in futures

trading on his behalf.
No. 07-2581 5

In its appellate briefs, Wells Fargo refers to the documents showing individual transactions between Siegel and

Ty-Walk as “contracts.” Each document shows the crop

year in which that particular trade took place. Some, but

not all, of them refer to “corn futures” or “bean futures,”

and some use other words, such as “puts” and “calls,” that

imply futures-trading transactions. For each of these

documents, Ty-Walk sent a trade-confirmation invoice

to Siegel. Siegel kept a copy of the invoices in his files,

and many of them were entered into evidence.

Siegel testified at the trial on his own behalf. Indeed,

with respect to the CCC loan, he provided the only evidence in the record. We address everything related to that

issue below. With respect to the alleged debts related to

futures trading, Siegel asserted that his arrangement with

Gibbons (and hence Ty-Walk) was only an agreement

to sell grain for cash. He maintained that he did not

anticipate any futures trading, and that he never gave TyWalk permission to perform options or futures trading

on his behalf. Rather, as he described it, he simply delivered grain to Ty-Walk and got paid for it. He never

thought that he owed any balance to Ty-Walk, because

only a few days normally elapsed between his delivery of

the grain and his receipt of payment. As for the documents that Wells Fargo now calls “contracts,” Siegel

testified that they were not intended to be contracts at all;

they were just the records generated after a trade took

place, to confirm that the transaction had occurred. TyWalk sent them to Siegel with instructions that he sign and

return them, and he obliged. He testified—and the documents plainly show—that Siegel frequently put question
6 No. 07-2581

marks and comments on the forms. He explained that he

did so because he did not understand the terms and

wanted to indicate that he neither understood nor agreed

with the parts of the documents to which his comments

were directed. Though he often wrote questions on the

forms before returning them, no one from Ty-Walk responded to his concerns.

Siegel also testified about a series of audit confirmation

letters that were entered into evidence. The letters were

similar to the commodity statements that Siegel received,

in that each showed the amount that Ty-Walk believed

Siegel owed on his marketing-program account as of a

given date. The audit letters requested that Siegel confirm

“directly to our auditors . . . the amount receivable

from you/payable to you on [date] on your farmer marketing account.” They then displayed two columns: “Crop

Year” and “Amount Due.” The last line of the columns

reflected the total balance that Ty-Walk thought was

owed (or due) on the account, followed by an instruction

that the letter’s recipient should “inform our auditors

whether this balance is in agreement with your records.

Indicate your answer below and mail it to our auditors

in the enclosed, pre-addressed, stamped envelope.” At the

bottom of the page were two choices, followed by a

signature line:

____ The balances shown above are correct.

____ The balances shown above are not correct. See

detail of the difference on the reverse side of this form.

On the audit letters dated August 19, 1998, and September

2, 1999, Siegel put an “x” next to the option stating that the
No. 07-2581 7

balances were not correct, but he did not provide any

explanation on the back of the form before signing and

returning it. On the 1999 letter, however, he wrote that the

amounts reflected “are not cash debt but Grain to be

delivered.” He testified at trial that what he “was trying

to say” with that note was that “I had confusion about

why I ever got this and that I was simply making a statement that my account with Ty-Walk was zero and that

the only ongoing [activity on the account] was that I was

selling grain.”

On the last audit letter in the record, dated August 25,

2000, Siegel checked the box stating that the “balances

shown above are correct.” Next to that he wrote, “Per

phone call with Buzz 9/28/00 and its clarifications. PS.”

Siegel signed the letter on October 3, 2000. At trial, Siegel

testified that he had gotten a letter identical to the one

dated August 25, 2000, approximately one month before

the letter reproduced in the record arrived. We cannot

find a copy of this first letter in the record, but Siegel

stated that he received it, reviewed it, and, as he had

done in the previous two years, checked the box indicating

that the balances were not correct. He also wrote that he

did not understand or agree with the numbers on the

form; he then signed it and sent it in the enclosed envelope,

as instructed. Sometime after doing so, he received a

phone call on September 28, 2000, from Gibbons. Siegel

testified that following his phone conversation with

Gibbons, he received another copy of the same letter, again

dated August 25, 2000. That is the version we have in the

record; on it, Siegel wrote that the balances were correct,

“Per phone call with Buzz 9/28/00 and its clarifications.”
8 No. 07-2581

Nevertheless, when asked during cross-examination

about his response on the August 25 letter, Siegel stated

that it was “not [his] intent” to indicate that the balances

were correct:

Q. You testified that you, in fact, believed that this

checkmark here was false, that indeed you believed

that the balances were not correct; is that your testimony?

A. Yes, sir.

Q. All right. So you told the auditor something that

you believed was false?

A. I believe that with the note here, that clarified

what I was trying to say.

Q. Well, does anything in the note say that the

balances are not correct?

A. In my mind, yes.

Q. And how was the auditor going to know that was

what was in your mind, Mr. Siegel?

A. I presume if they had a question about it, they

could have called me.

Q. But when you sent this—and to whom did you

send this document?

A. To Ty-Walk.

Q. All right. But you realized, did you not, that it

would go to the auditors, ultimately?

A. It came to me from Ty-Walk. It was going back to

Ty-Walk.
No. 07-2581 9

Q. But you understood it was for use by the auditors;

did you not?

A. No.

Q. You didn’t?

A. It was a request from Ty-Walk to Ty-Walk.

Q. Well, in the document, Ty-Walk requests that you

confirm to the auditors that the balances are correct;

isn’t that what it says?

A. Yes, sir. 

When asked on redirect why he sent the form to Ty-Walk

rather than to the auditors, Siegel replied that he did so

“[b]ecause it came to me with a self-addressed stamped

envelope with Ty-Walk Liquid Sales as both the return

address and the mailing address.” Siegel was then dismissed; no one asked him about the “clarifications” that he

received from Gibbons over the phone. Gibbons did not

testify at the trial, and so the court did not hear his view

of the phone conversation—nor, for that matter, did it

hear Gibbons’s perspective on the scope of his oral contract with Siegel. Though Siegel petitioned to compel

Gibbons’s testimony, the district court denied that request. It is notable that it was Siegel, and not Wells Fargo,

who actively sought Gibbons’s testimony, in light of the

fact that Gibbons was the only person who could potentially have refuted or undermined Siegel’s version of the

dealings between Siegel and Ty-Walk.

The court also heard from several other witnesses. Wells

Fargo presented the testimony of two former Ty-Walk
10 No. 07-2581

employees, Cindy McDonald and Barbara St. Germaine.

McDonald worked for Ty-Walk as a customer contact

representative and general “go-between” who relayed

messages from customers to Gibbons. She stated that

Gibbons handled all of the trading decisions, and that

while it was her general understanding that the marketing

program involved the trading of futures, she could not

confirm whether Siegel’s account involved futures transactions or if Siegel was aware that trading in futures was

occurring. She testified that she had never spoken personally with Siegel, that she was not a contact for Siegel’s

account, and that she did not know whether Siegel had

authorized certain trades on his account. She was also

unable to say whether certain documents entered into

evidence were true and accurate. She did, however, testify

that it was her understanding that the documents sent

to Siegel—which Wells Fargo calls “contracts” and

Siegel labels as mere trade records—were “confirmations

of trade” that were “generated after the transaction

occurr[ed].”

Like McDonald, St. Germaine testified that she was

never contacted personally by Siegel, that she was never

assigned to Siegel’s account, and that she did not have any

personal knowledge about his account. The district court

found that while these witnesses “appeared credible, . . .

their testimony was of limited relevance due to their lack

of personal knowledge on key issues[,] and their testimony

was merely tied to general assertions in regards to TyWalk’s business practices and the documentary evidence

presented by Wells.” The court emphasized that these

witnesses said “that they did not have any personal
No. 07-2581 11

knowledge relating to certain business practices at TyWalk, which were controlled by Gibbons.”

To supplement his own testimony, Siegel called an

expert witness, Philip Malefyt. The court found that

Malefyt was qualified to testify and offer expert opinions

“concerning certain issues before this court, including

guaranteed minimum price contracts, hedge to arrive

contracts, purchase to arrive contracts, and premium bid

contracts.” Malefyt testified that in his opinion, Ty-Walk’s

trading strategy was designed to generate commission

income for itself, and that its accounting methods with

respect to the marketing program were not customary.

His opinion was that the marketing program was in

reality a Ponzi scheme. Ty-Walk’s documents sometimes

reflected money coming in, but they failed to recognize

liabilities and rolled over losses so that they would not

show up on the books. Malefyt also pointed to places in TyWalk’s accounting records where amounts that should

have been entered as net losses were instead noted as net

gains. The district court found that “Malefyt credibly

testified and supported his conclusions that Ty-Walk did

not follow reliable accounting practices and that its

records were not accurate or reliable.” It also pointed out

that “to the extent that Malefyt has offered certain legal

conclusions or testimony relating to topics that he did

not have expertise in, we have disregarded such testimony.”

Siegel attempted to introduce evidence of a lawsuit that

Wells Fargo filed against Clifton Gunderson, LLC, the

certified public accounting firm that Ty-Walk hired to
12 No. 07-2581

conduct its audits. In that suit, Wells Fargo accused Clifton

Gunderson of professional negligence, negligent and

intentional misrepresentation, and breach of contract

relating to the accounting firm’s work on Ty-Walk’s

financial statements. The complaint alleged that Ty-Walk’s

grain inventory balance was grossly overstated and that

its financial condition based on that inventory was overstated and inaccurate. Siegel wanted the complaint admitted as the statement of a party-opponent, but the

district court granted Wells Fargo’s motion in limine to

exclude it. In granting that motion, the court also excluded evidence that explained, at least in part, why

Gibbons was unavailable to testify: he was incarcerated as

a result of his conviction for crimes relating to the operation of Ty-Walk.

The district court issued its memorandum opinion on

June 8, 2007. It found that Siegel and Ty-Walk entered into

a verbal contract in 1995 that established the terms of

Siegel’s participation in the marketing program. The court

also found, as Siegel had argued, that no written contract memorialized Siegel’s participation in the program

or the obligations associated with it, and that Siegel “did

not anticipate doing any futures trading,” nor did he ever

“enter[] into an oral agreement authorizing Ty-Walk to

perform futures trading on his behalf.” The bottom line

was that “Siegel never agreed, verbally or in writing, to

allow Ty-Walk to trade futures on his behalf.” It also

concluded that Siegel had offset Ty-Walk’s payment on

the CCC loan by delivering grain as collateral, and so it

ruled against Wells Fargo on that claim as well.
No. 07-2581 13

II

A

On appeal, Wells Fargo has tried to reargue the facts,

recognizing that it must show that the district court

committed clear error. See FED. R. CIV. P. 52(a)(6). As we

have often commented, this is a heavy burden, given the

deference we owe to the district court’s credibility

findings and assessment of the relative weight of the

evidence.

We first address the claim pertaining to Siegel’s

marketing-program account. The district court concluded

that “Wells Fargo has not shown by a preponderance of

the evidence that there was a written or oral agreement

formed between Siegel and Ty-Walk that authorized TyWalk to trade futures or options on Siegel’s behalf.” The

court noted that the bank’s witnesses at trial “lacked

personal knowledge of the relevant facts in this case,” and

it rejected Wells Fargo’s contention that its documentary

evidence proved that Siegel’s initial verbal agreement

with Gibbons included an authorization for futures

trading. Rather, the court found that “Siegel testified

credibly” that he had signed and returned the documents

only “because that was what he was instructed to do by

Ty-Walk, not because he intended to memorialize a preexisting contract.” The court found support for this conclusion in Siegel’s testimony, corroborated by the documents, that he wrote questions on many of the trade

records that he signed, indicating that he did not understand certain entries, or that he believed them to be

inaccurate. No one at Ty-Walk responded to his questions
14 No. 07-2581

or concerns, the court found, and so Siegel could not be

faulted for the lack of clarification. This was particularly

true, the court continued, given additional evidence, such

as Malefyt’s expert testimony, the statements of the

former Ty-Walk employees, and Ty-Walk’s accounting

records, showing that Ty-Walk used informal and

irregular accounting methods, and that Gibbons “engaged

in business with his clients’ grains based upon a handshake, phone call, or other informal communication

rather than putting agreements in writing, which made

it more difficult for Wells [Fargo] to prove its case.” In

short, the court found that Wells Fargo’s evidence was

“incomplete and inconsistent,” and it concluded that the

bank’s “pile of documents falls far short of establishing

liability on the part of Siegel.”

While this was not an open-and-shut case for Siegel, we

conclude that there was no clear error in the district court’s

finding that Siegel never authorized Ty-Walk to engage

in futures trading on his behalf. The district court

expressly credited Siegel’s testimony that he neither

anticipated that type of arrangement nor did he understand that Ty-Walk was trading in futures for his account.

“Special deference is given to determinations based on

credibility findings, which ‘can virtually never be clear

error.’” Piggie v. Cotton, 342 F.3d 660, 663 (7th Cir. 2003)

(quoting Anderson v. Bessemer City, N.C., 470 U.S. 564, 575

(1985)). Wells Fargo argues that Siegel’s testimony is

implausible, because a man who has been a farmer for so

many years and has taken classes in grain marketing at

junior college must be a “knowledgeable and attentive

trader” with sufficient sophistication to understand that
No. 07-2581 15

the documents he has signed indicate ongoing trading in

futures. But Siegel’s testimony is not incredible as a

matter of law, particularly in light of the questions and

quibbles with which he adorned the trade confirmation

forms.

Wells Fargo stresses the fact that Siegel did sign and

return these documents to Ty-Walk. A party may not

disclaim knowledge of a contract that he has signed by

later asserting that he did not read it or understand it. See

Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1417 (7th

Cir. 1987) (“One who signs a contract in the absence of

fraud or deceit cannot avoid it on the grounds that he did

not read it or that he took someone else’s word as to

what it contained.”). Following that logic, Wells Fargo

argues that Siegel cannot escape the obligations

evidenced by the trade-confirmation forms simply by

jotting down question marks on them before applying

his signature. While that may be true in principle, it

presupposes the answer to a central question: were the

trade-confirmation forms independent contracts, or were

they only documents confirming that a transaction took

place in the past? Siegel has argued throughout this

litigation that the documents are not “contracts” in the

sense of an agreement that binds the parties to future

obligations; rather, he asserts, they are merely “trade

records” that confirm the occurrence of an earlier transaction. The bank’s own witnesses, former employees of TyWalk, echoed Siegel’s characterization of these documents, and the district court found that they were merely

trade records. That finding was not clearly erroneous.
16 No. 07-2581

This would be a different case if Wells Fargo had argued,

and proven, that each individual document was a

separate contract, and that each contract established a

certain sum that Siegel agreed to pay when he signed that

particular document. But the bank did not advance that

argument in the district court, nor did it spell out such a

position in its briefs on appeal. Rather, Wells Fargo at all

times has contended only that the documents, as a group,

demonstrate that the bank is correct in arguing that the

initial agreement between Siegel and Ty-Walk authorized

futures trading. In other words, Wells Fargo has offered

the documents for the sole purpose of establishing the

scope of the original verbal agreement that Siegel executed

with Gibbons. Because the series of later documents

reflects futures trading, its argument goes, it necessarily

follows that Siegel authorized and was aware of Ty-Walk’s

trading of futures on his behalf. But on these facts, we

do not think that the trade records conclusively establish

the scope of Siegel’s arrangement with Gibbons, especially

when the district court credited Siegel’s testimony to

the contrary and when the documents make no reference

to the oral agreement.

Had Wells Fargo advanced the position that each document was a separate contract that bound Siegel to the

amount reflected as owing for that particular transaction,

we might have considered remanding the case to the

district court to determine which documents, if any,

satisfied the requirements of a binding contract. The end

result may (or may not) have been that Wells Fargo could

have collected at least part of what it thinks Siegel owes.

But the bank has now waived that argument. We can be
No. 07-2581 17

certain of this because, after we detected a few ambiguous

statements in the briefs that might have been read as

articulating an “individual contract” theory, counsel for

Wells Fargo expressly disclaimed such an approach when

the panel asked about it directly at oral argument.

Looking at the trade confirmations solely to see if

they provide evidence that the original oral agreement

included Siegel’s authorization for futures trading, we

cannot find that the district court clearly erred in concluding that they do not. Even Wells Fargo admits that the

relation between Siegel and the company was informal,

and there simply is no evidence before us that conclusively

contradicts Siegel’s testimony, credited by the district

court, that he never authorized Ty-Walk to trade in

futures on his behalf. As the plaintiff in this action, Wells

Fargo bears the burden of proving that the agreement

was as broad in scope as it believes, and that as a result

Siegel had a balance due on his marketing-program

account. It has failed to meet that burden.

B

We turn now to the CCC loan. Everyone agrees that TyWalk paid off the loan when it sent a check to CCC in the

amount of $50,785.16; the question is whether Siegel ever

reimbursed Ty-Walk for that payment. If so, then Siegel

has no debt on that account to Ty-Walk, and there is

nothing for Wells Fargo to reach; if not, then Wells

Fargo would be entitled to have Siegel pay it instead. Wells

Fargo argues that Siegel never repaid the money to TyWalk, while Siegel counters that he repaid Ty-Walk not in
18 No. 07-2581

money, but in grain. Siegel testified at trial that he deposited corn as collateral to cover the loan paid by Ty-Walk to

CCC, and that he did not need to pay money to Ty-Walk

because the value of the corn he deposited exceeded

the amount of Ty-Walk’s payment on his behalf.

Once again, the district court credited Siegel’s testimony

and concluded that: (1) Ty-Walk had repaid Siegel’s loan

by writing a check to CCC; (2) once CCC received the

check, it extinguished the loan, and the corn Siegel had

delivered to Ty-Walk as collateral was “free and clear”;

(3) Siegel never sold the corn warehoused at Ty-Walk for

the CCC loan, nor did Ty-Walk ever return that grain to

Siegel; (4) Ty-Walk still possessed the collateral corn

when it closed its doors on August 23, 2001, and to this

day it has not been returned to Siegel; and (5) the value

of the corn that Ty-Walk held as collateral exceeded the

value of the payment the company made to extinguish

Siegel’s loan. Based on those facts, the district court

concluded that “there was no breach of contract by Siegel

and that Siegel does not owe any funds to Ty-Walk in

regards to the 2000 CCC Loan.”

Wells Fargo faults the district court for ruling in favor of

Siegel on this issue “solely on the basis of Paul Siegel’s

‘say-so.’” It forgets, however, that it was Wells Fargo’s

burden to come forward with proof that Siegel had

failed to repay Ty-Walk. Wells Fargo’s only reason for

criticizing the district court’s finding is that there was “no

warehouse receipt” and “no paperwork of any kind” to

back up Siegel’s story. Nothing in the record contradicts

Siegel’s account, however, and the district court was
No. 07-2581 19

entitled to credit his testimony even without supporting

documentation. See United States v. Bailey, 510 F.3d 726,

733 (7th Cir. 2007). Siegel’s testimony was neither preposterous nor in defiance of the laws of nature, and the court

did not clearly err in crediting it. The bank cannot now

argue for reversal based on a lack of evidence, when it

was its own burden to supply the proof of its claim.

* * *

The judgment of the district court is AFFIRMED.

9-2-08