Impulse Trading, Inc. v. Norwest Bank Minnesota, N.A.

Marc Stipakov owned Impulse Trading, Inc. (Impulse) (plaintiff) and was Impulse’s only employee. Stipakov banked with Norwest Bank of Minnesota, N.A. (Norwest) (defendant). Impulse started doing business with companies in Russia. Because Russian rubles were difficult to convert to dollars, Impulse arranged for payment in Indian rupees. Stipakov tried to open an account at the State Bank of India (SBOI); however, SBOI informed Stipakov that he could not open an individual account there. Accordingly, Stipakov called Norwest to discuss how he could facilitate his transactions. Norwest informed Stipakov that it had an account with SBOI and agreed to accept the rupees in said account, exchange the rupees for dollars, and credit the funds to Stipakov’s Norwest account. A couple of funds transfers occurred in this manner without any problems. Problems subsequently arose involving a payment order that SBOI received from a Russian bank on November 21, 1991, for approximately 6,000,000 rupees. On December 19, 1991, SBOI deposited the rupees in Norwest’s SBOI account. On December 28, 1991, SBOI learned from another office that the deposit must be reversed because both the Foreign Exchange Regulations of India and the Soviet-Indian Trade and Payment Agreement prohibit the transfer of nonconvertible rupees to accounts held by firms and banks outside of India and Russia. SBOI did not immediately reverse the deposit. Consequently, Norwest exchanged the rupees and credited $231,929.12 to Stipakov’s account. Thereafter, SBOI reversed the deposit. In turn, Norwest debited the $231,929.12 from Stipakov’s account plus interest. Impulse sued Norwest for violating Uniform Commercial Code (UCC) Article 4A, as well as for the common-law claims of wrongful setoff, conversion, and negligence.