Present: Carrico, C.J., Compton, Stephenson, Hassell, Keenan, 

and Koontz, JJ., and Poff, Senior Justice 

STANLEY YESKOLSKI, SR. 

 OPINION BY 

v. Record No. 961005 SENIOR JUSTICE RICHARD H. POFF 

 January 10, 1997 

KIMBLYN F. CROSBY, ET AL. 

 FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH 

Robert B. Cromwell, Jr., Judge 

 This is an appeal from a judgment entered in a suit in 

equity praying for a decree declaring a note secured by a second 

deed of trust satisfied and the lien released, or, in the 

alternative, fixing the balance due on the note. We review the 

facts disclosed in the testimony and exhibits introduced in an 

ore tenus hearing conducted by a commissioner in chancery. 

 By deed dated December 7, 1981, Arnold B. Amdursky and D. 

Diane Amdursky, husband and wife, conveyed a parcel of real 

estate in Virginia Beach to William A. Crosby and Kimblyn F. 

Crosby, husband and wife. Subject to a first deed of trust 

securing a debt of $211,000 due Virginia Beach Federal Savings 

and Loan Association, the Crosbys, trading as Crosby Construction 

Company, executed the deed of trust at issue securing a note 

payable to the order of the Amdurskys in the sum of $68,000. 

Dated January 1, 1984, that note was payable in monthly 

installments of $1,000 for principal and $793.33 for interest and 

was "due and payable in full on January 1, 1985." 

 The Crosbys, having reduced the balance due to $64,000 by 

payment of the first four installments, decided to rent the house 

constructed on their property to Richard G. Maher and Patricia J. 

Maher, husband and wife. To that end, the Crosbys, the Mahers, 
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and the Amdurskys entered into a written agreement dated June 14, 

1984. The Mahers agreed to pay the Crosbys a monthly rental 

equal to the monthly payments due under the first deed of trust 

and the sum of $30,000 as the "not refundable" price of an option 

to purchase. As an "additional consideration for [the option] 

payment", the Crosbys agreed to pay the balance due on a $20,000 

note secured by a third deed of trust on the property held by 

certain members of the Crosby family and to "deliver to the 

Mahers a cancelled note and certificate of satisfaction". 

 Under the agreement, the Mahers were also required to pay 

the Amdurskys $50,000 at the rate of $10,000 per month. The 

Amdurskys agreed that, upon receipt of those payments, they would 

assign the second deed of trust note to the Mahers. Paragraph 5 

of the agreement provided that "upon said assignment, . . . the 

Crosbys shall have no personal liability upon said note and that, 

should for any reason the Mahers deem it necessary to exercise 

their rights under the deed of trust or note, the Mahers shall 

look only to the secured property and not to any makers or 

endorsers on said note." 

 Paragraph 9 of the agreement stated that upon default by the 

Mahers, "all payments made to that date shall be retained by the 

Crosbys as liquidated damages and the Crosbys shall be entitled 

to regain possession of the premises." Paragraph 10 provided 

that in the event of default in payments the Mahers were required 

to make to the Amdurskys, "such sums as may have been paid prior 
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to default shall be retained by the Amdurskys and the Crosbys 

shall be entitled to a credit therefor." 

 The Mahers made the $30,000 purchase-option payment to the 

Crosbys and, as Diane Amdursky acknowledged in her testimony, the 

full $50,000 payment due the Amdurskys. A document, signed by 

Arnold Amdursky and addressed to the holder of the first deed of 

trust note, stated that the "deed of trust note dated January 1, 

1984 in the amount of $68,000.00 from William and Kimberly [sic] 

Crosby to Arnold and Diane Amdursky has been paid in full". 

 The Amdurskys subscribed the following language that had 

been added to the foot of the second deed of trust note: "the 

undersigned do hereby assign the foregoing note . . . to the 

order of bearer without recourse on the undersigned." 

 On September 23, 1985, Peter K. Babalas, an attorney, made a 

telephone call to his former client, Stanley Yeskolski, a farmer 

in Spring Grove, Virginia. Babalas represented that he had a 

note owned by the Mahers, that the note was for sale for $65,000, 

and that the note was a good investment secured by a deed of 

trust on ocean front property. On September 24, 1985, Yeskolski, 

who had not seen Babalas for 10 years, drafted, signed, and 

issued his check payable to "Peter K. Babblas [sic]" for $65,000 

"for secured loan". 

 William Crosby died on October 23, 1985. On December 2, 

1986, Kimblyn Crosby obtained an unlawful detainer judgment 

against the Mahers for default in rental payments and seized 
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possession of the property. On October 2, 1987, Kimblyn Crosby, 

in person and as executrix of her husband's estate, and Victor 

Peck, who had acquired title to the Crosby property1

, filed this 

suit against Yeskolski, the Amdurskys, the Mahers, and the 

trustees in the deeds of trust. Babalas died later that year. 

Yeskolski went to Babalas' office and, for the first time, 

obtained the past due Crosby note and a copy of the June 1984 

agreement. He had received no payment from Babalas or the 

Mahers. 

 The suit remained pending for eight years. Following an ore

tenus hearing conducted in April 1995, the commissioner in 

chancery issued his report. 

 The commissioner found that "the statute of limitations has 

run on the $68,000 note and it cannot be enforced"; that "the 

note was paid before the $65,000 was advanced"; that "the current 

holder [Yeskolski] is not the holder of the note"; that "[t]he 

Amdurskys admit they have been paid in full and are owed 

nothing"; that "[t]here is no evidence that any of the money paid 

to Babalas was ever paid to Maher in consideration for the note"; 

that when Maher obtained the note, "no one was responsible to 

make any payments to Maher"; and that "nothing is owed to . . . 

Yeskolski, as he lent no money to the Crosbys or the Mahers or 

the Amdurskys". Noting that, upon default by the Mahers, the 

 

 1Title was later acquired by Gregory G. Vernosky and Lori B. 

Vernosky, husband and wife, and they were added as parties to this 

suit. 
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$50,000 payment the Mahers made to the Amdurskys "would be 

credited on the note", the commissioner recommended that "if the 

Court finds that the lien is enforceable . . . it is enforceable 

only to the extent of $14,000." 

 Yeskolski filed 43 exceptions to the commissioner's report. 

 In a final judgment order entered February 27, 1996, the 

chancellor sustained Yeskolski's exception "to the Commissioner's 

finding that no sum is owed on the note in question"; ordered 

payment of $14,000 to Yeskolski "in full satisfaction of the deed 

of trust note in question"; and decreed that "immediately upon 

such payment, the lien of the second deed of trust . . . securing 

said note be released as a matter of record . . . ." We awarded 

this appeal to consider Yeskolski's multiple assignments of error 

and the appellees' assignment of cross-error. 

 The standard of review is that repeatedly and consistently 

defined and applied by this court as follows: 

 While the report of a commissioner in chancery does not 

carry the weight of a jury's verdict, Code § 8.01-610, 

it should be sustained unless the trial court concludes 

that the commissioner's findings are not supported by 

the evidence . . . . [W]here the chancellor has 

disapproved the commissioner's findings, this Court 

must review the evidence and ascertain whether, under a 

correct application of the law, the evidence supports 

the findings of the commissioner or the conclusions of 

the trial court. Even where the commissioner's 

findings of fact have been disapproved, an appellate 

court must give due regard to the commissioner's 

ability, not shared by the chancellor, to see, hear, 

and evaluate the witnesses at first hand. 

Hill v. Hill, 227 Va. 569, 576-77, 318 S.E.2d 292, 296-97 (1984) 

(citations omitted). Absent ambiguity in the import of the 
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language contained in the note, the deed of trust, the written 

agreement, and the exhibits admitted at trial, we apply the 

plain-meaning rule as defined in Globe Company v. Bank of Boston, 

205 Va. 841, 848, 140 S.E.2d 629, 633 (1965). Accord Berry v. 

Klinger, 225 Va. 201, 208, 300 S.E.2d 792, 796 (1983); see also

Management Enterprises v. The Thorncraft Co., 243 Va. 469, 472, 

416 S.E.2d 229, 231 (1992); Capital Commercial Prop. v. Vina 

Enterprises; 250 Va. 290, 294-95, 462 S.E.2d 74, 77 (1995). 

 On brief, Yeskolski contends that "[t]he facts and the 

applicable law in this case do not support the commissioner's and 

the chancellor's finding that Stanley Yeskolski is not a holder 

in due course" and that the chancellor erred in limiting his 

award to $14,000. The appellees assigned cross-error to the 

trial court's failure to affirm the commissioner's finding that 

no obligation remained on the note secured by the second deed of 

trust. In support of their assignment of cross-error, the 

appellees contend that the chancellor erred in failing to uphold 

the commissioner's finding that the note in issue had been paid 

in full before Yeskolski made the $65,000 payment to Babalas and, 

consequently, that the finding that Yeskolski was not a holder in 

due course was correct. We agree with the appellees. 

 Once it appears that a defense exists, "a person claiming 

the rights of a holder in due course has the burden of 

establishing that he or some person under whom he claims is in 

all respects a holder in due course." Former Code § 8.3-307(3). 
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 Applying definitions stated in the statutory ancestors of Code 

§§ 8.1-201(20) and former 8.3-202, we have said that 

 before a transferee of a promissory note can become a 

holder in due course, he must first qualify as a 

holder. A transferee may become a holder of order 

paper only by "negotiation," that is, by indorsement 

and delivery, and the indorsement must be by or on 

behalf of a person who is himself a holder. 

Becker v. Nat. Bank & Trust Co., 222 Va. 716, 720, 284 S.E.2d 

793, 795 (1981). 

 The record shows that the Mahers obtained possession of the 

Crosby note by an assignment executed by the Amdurskys, the 

payees in the note. The assignees transferred the note to 

Babalas. After his death, his office staff transferred 

possession to Yeskolski. Thus, Yeskolski was a mere transferee 

of the note. As Becker teaches, he was not a holder by 

"negotiation," that is, he did not "become a holder of order 

paper . . . by indorsement and delivery" because there was no 

delivery under an endorsement made "by or on behalf of a person 

who [was] himself a holder." Id. Since neither the Mahers nor 

Yeskolski qualified as a holder, Yeskolski cannot qualify as a 

holder in due course. 

 With certain exceptions, "a holder in due course . . . takes 

the instrument free from . . . all defenses of any party to the 

instrument with whom the holder has not dealt". Former Code 

§ 8.3-305. Stated differently, "[u]nless he has the rights of a 

holder in due course any person takes the instrument subject to 

. . . all defenses of any party which would be available in an 
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action on a simple contract". Former Code § 8.3-306(b). 

 The commissioner found that "the note was paid before the 

$65,000 was advanced"; that "[t]he Amdurskys admit they have been 

paid in full and are owed nothing"; and that "nothing is owed to 

. . . Yeskolski, as he lent no money to the Crosbys or the Mahers 

or the Amdurskys". Those findings, fully supported by the 

evidence before the commissioner, identify defenses "which would 

be available in an action on a simple contract". 

 Moreover, any claim Yeskolski might make against the Crosbys 

was subject to a procedural defense. The commissioner found that 

"the statute of limitations has run on the $68,000 note and it 

cannot be enforced". The right of action to enforce a time 

instrument accrues "on the day after maturity", former Code 

§ 8.3-122(1)(a), and, the statute of limitations on an action on 

a written contract in effect at trial, Code § 8.01-246(2), was 

five years. As appears from the face of the Crosby note, it was 

"due and payable in full on January 1, 1985." Yeskolski became 

the transferee of the note in October 1987. The statute of 

limitations ran in January 1990. Yeskolski, who has never filed 

an action to enforce the Crosby note, has no right to do so now. 

 Sustaining the appellees' assignment of cross-error, we hold 

that the chancellor erred in failing to uphold the commissioner's 

finding that the second deed of trust note had been paid in full 

before Yeskolski acquired it. Necessarily, our holding rejects 

Yeskolski's contention that the judgment entered below in his 
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favor was inadequate, and we need not address the several 

arguments ancillary to his other assignments of error. 

 Accordingly, we will reverse and vacate the judgment entered 

below and enter final judgment here declaring the note secured by 

the second deed of trust satisfied in full and the lien of that 

deed of trust released. 

Reversed and final judgment.