Definition
Approved endorsed notes are promissory notes signed by a purchaser or borrower and additionally endorsed by a third party, where both the endorser and the note itself must meet the satisfaction of the payee or seller before being accepted as payment or security. The arrangement provides the payee with two parties liable on the instrument — the maker and the endorser — rather than just one. The seller retains discretion to reject the note if the proposed endorser is not deemed sufficiently creditworthy.
The term arises most commonly in the context of credit sales at public auction or private commercial transactions where the seller agrees to extend credit on the condition that the buyer's note carry a satisfactory co-signer. The note is not accepted as final payment until both the endorsement and the endorser are approved.
Common Language
Modern common usage (Wiktionary): "Approved" — judged acceptable; given official sanction. "Endorsed" — signed on the back of a document; supported or recommended.
Historical common usage (Webster's 1913): "Endorse" — to write upon the back of; specifically, to write one's name on the back of a note or bill, thereby making oneself responsible for its payment if the original maker defaults.
The legal term draws on both words in their ordinary senses but binds them into a precise commercial arrangement. In common usage, an "approved" document is simply one someone has sanctioned, and "endorsed" can mean little more than recommended. In the legal context, approval is a condition precedent — the payee's affirmative acceptance of both the instrument and the specific endorser — and endorsement carries full secondary liability under negotiable instruments law.
Why It Matters in Research
Researchers encountering this term in historical commercial records, auction notices, estate sale documents, or early American contract disputes should understand that "approved endorsed notes" is a term of art describing a specific credit arrangement, not a generic reference to any endorsed instrument. The phrase signals a conditional transaction: the sale or credit extension is not complete until the seller has exercised approval. Disputes arising from these arrangements often turn on whether approval was properly given, withheld, or unreasonably refused.
The term appears with particular frequency in records from the eighteenth and nineteenth centuries, when credit sales at public auction were common and formal banking infrastructure was limited. Sellers required the endorsement of a known, solvent third party as a substitute for institutional credit guarantees. Researchers working in probate records, sheriff's sale notices, and merchant account books of this era will encounter the term as standard transactional language.
A trap in historical sources: the phrase sometimes appears in abbreviated or varied forms — "approved notes," "endorsed notes," or simply "notes with good endorsement" — referring to essentially the same arrangement. These variations may appear in the same document corpus without consistent usage, requiring the researcher to interpret from context whether the full approval-plus-endorsement condition is intended.
The term also connects to broader questions about negotiable instruments doctrine. Whether the payee's approval constituted acceptance under the law of the jurisdiction, and what standard of reasonableness applied to refusal, were live questions in early commercial litigation. Researchers should be alert to jurisdiction-specific treatment in case law predating uniform negotiable instruments legislation.
Historical Dictionary Support
Bouvier's Law Dictionary defines approved endorsed notes as notes endorsed by someone other than the maker, for additional security, with the endorser being satisfactory to the payee. Bouvier specifically situates the term in the context of public sales made on credit, explaining that the purchaser gives a promissory note for the purchase amount, endorsed by another, which if approved by the seller is received in satisfaction of the purchase price. The entry is brief but precise, capturing the three operative elements: the promissory note of the buyer, the endorsement of a third party, and the seller's approval of both.
Bouvier's treatment reflects the commercial realities of the period. The definition does not address what standard governs the seller's approval or whether refusal could be challenged — gaps that a researcher will need to fill from case law and treatises on negotiable instruments rather than from the dictionary alone.
No competing historical dictionary definitions are available in the source material for comparison.
Jurisdictional Note
The legal effect of endorsement and the conditions under which a payee may reject an offered endorser were governed by state commercial law before the widespread adoption of uniform negotiable instruments legislation beginning in the late nineteenth century. Researchers working across jurisdictions should not assume uniform treatment of the approval condition or the consequences of its breach.