Michael L. Doyle, Plaintiff-appellee, v. Trinity Savings and Loan Association, Tsl Servicecorporation, Stm Mortgage Company, Defendants-appellants,andfederal National Mortgage Association, Defendant.michael L. Doyle, Plaintiff-appellee, v. Trinity Savings and Loan Association, Tsl Servicecorporation, Stm Mortgage Company, Defendants-appellees,andfederal National Mortgage Association, Defendant-appellant, 940 F.2d 592 (10th Cir. 1991)

In 1989, we affirmed judgments rendered in favor of Michael L. Doyle against Trinity Savings and Loan Association, now Bright Banc Savings Association,¹  against TSL Service Corporation and STM Mortgage Company, both now Bright Mortgage Company,²  and against the Federal National Mortgage Association^MA. Doyle had sought damages and cancellation of a note and real estate mortgage because of fraudulent alteration of the note. See Doyle v. Trinity Sav. & Loan Ass'n, 869 F.2d 558 (10th Cir. 1989). All parties petitioned for rehearing. In view of the grant of certiorari by the Oklahoma Supreme Court in Goss v. Trinity Sav. & Loan Ass'n, No. 67,298 (Okla.Ct.App.1988), a case on which we had directly relied, we abated this case pending the Oklahoma Supreme Court's decision in Goss. For the reasons set out below, we now deny the petition for rehearing of Trinity Savings, TSL, and STM, and we grant in part the petition of FNMA.

Trinity Savings, TSL, and STM filed a joint petition for rehearing contending that we had incorrectly held the alteration of the note to be material. In Goss v. Trinity Sav. & Loan Ass'n, 813 P.2d 492, 62 Okla. Bar J. 790, 792 (Okla.S. Ct. 1991), the Oklahoma Supreme Court settled this issue by declaring an analogous note alteration to be material as a matter of law. We therefore deny the petition for rehearing of these defendants.

FNMA filed a petition for rehearing generally condemning our reliance on the Oklahoma Court of Appeals decision in Goss. The recent Oklahoma Supreme Court decision in Goss reversed the appeals court conclusion that the variable interest rate in the note rendered the note nonnegotiable. See Goss, 813 P.2d at 499, 62 Okla. Bar J. at 793-95. Because the note in Goss was declared negotiable under Oklahoma law, FNMA would be a holder in due course, entitled to enforce the note despite the unauthorized alteration of the note, if it could establish that it took the note without notice of the defect. See Okla.Stat. tit. 12A, Secs. 3-302(1), 3-305 (1981); see also Goss, 813 P.2d 499-500, 62 Okla. Bar J. at 793, 795-96. The court therefore remanded the case to enable the trial court to determine whether FNMA lacked notice of the unauthorized alteration.

Goss controls our opinion on rehearing. We thus hold that the variable interest rate note in our case was negotiable. We decline Doyle's invitation to further hold that FNMA had notice of the alteration as a matter of law, and we remand for the trial court to make that determination in accordance with the opinion in Goss, 813 P.2d at 500-01, 62 Okla. Bar J. at 796, as amended on rehearing, 62 Okla. Bar J. 1779 (Okla.S. Ct. 1991).