No. 93-022 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

IN RE THE MARRIAGE OF: 

ELIZABETH A. MURPHY, 

Petitioner-Appellant, 

and 

KENNETH R. MURPHY, 

Respondent-Respondent. 

APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable Joel G. Roth, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Joan E. Cook, Miller & Cook, Great Falls, Montana 

For Respondent: 

Marcia Birkenbuel, Great Falls, Montana 

NOV -2 1993 

Submitted on Briefs: June 10, 1993 

Decided: November 2, 1993 

Filed: 

bI &A se.;r;t CLER~ PF SUPRLUE 

STATE OF M~H~~ 
Justice Fred J. Weber delivered the Opinion of the Court. 

This is an action from the Eighth Judicial District Court, 

Cascade County, granting a dissolution and apportioning the marital 

estate. Petitioner wife appeals the court's division of the 

marital estate and specifically the court's exclusion of her 

husband's Veteran's Administration (VA) disability benefits from 

the marital estate. Affirmed. 

We consider the following question on appeal: Did the 

District Court abuse its discretion in dividing the marital estate 

without sufficient consideration of the parties' opportunities for 

future income or by failing to consider Kenneth's VA disability 

benefits in the marital estate? 

Elizabeth A. Murphy (Elizabeth) and Kenneth R. Murphy 

(Kenneth) were married on December 15, 1970 in Basle, Switzerland. 

Two children were born to the couple. Elizabeth did not work 

outside the home during the marriage. Kenneth served in the United 

States Air Force from 1962 until 1990. 

After Kenneth's retirement, the Department of Veteran's 

Affairs determined that he was one hundred percent service related 

disabled. He currently receives VA disability payments of $1849 

per month. 

Elizabeth filed a petition for dissolution and the matter was 

heard by the trial court on August 19, 1992. The parties 

stipulated joint legal custody of the one minor child with primary 

custody awarded to Kenneth. The parties further agreed that 
Kenneth would not seek child support if Elizabeth would not seek 

maintenance. 

In its conclusions of law, the District Court granted 

dissolution of the marriage and joint legal custody of the minor 

child, with primary custody to Kenneth. The court ordered that 

each party pay fifty percent of the remainder of the child's 

medical bills after insurance coverage. Further, the court 

determined as a matter of law, Kenneth's VA disability pay is not 

a marital asset. The court stated that it had considered all the 

relevant factors set out in 5 40-4-202, MCA, when dividing the 

marital estate. 

Did the District Court abuse its discretion in dividing the 

marital estate without sufficient consideration of the parties1 

opportunities for future income or by failing to consider Kenneth's 

VA disability benefits in the marital estate? 

In considering a district court's division of marital 

property, we will not discount the considerable discretionary power 

that must be exercised by the district courts in these cases. 

Marriage of Hamilton (1992), 254 Mont. 31, 835 P.2d 702. We review 

a district court's findings of facts relating to the division of 

marital property by determining whether the findings are clearly 

erroneous. Marriage of Danelson (1992), 253 Mont. 310, 833 P.2d 

215. We will review a district court's legal determinations to see 

if the court's conclusions are correct. Steer Inc. v. Department 

of Revenue (1990), 245 Mont. 470, 803 P.2d 601. 
However, district courts must make discretionary decisions, 

using reasonable judgment and relying on common sense, in an 

attempt to make an equitable division of property. Hamilton, 254 

Mont. at 36, 835 P.2d at 704. These discretionary judgments made 

by the trial court are presumed to be correct and will not be 

disturbed by this Court absent an abuse of discretion. Danelson, 

253 Mont. at 317, 833 P.2d at 219-220. 

Elizabeth here argues that according to In re Marriage of 

Cooper (1990), 243 Mont. 175, 793 P.2d 810, the District Court 

should have considered Kenneth's disability pay when evaluating 

each spouse's potential future income. Elizabeth reasons that 

despite the U.S. Supreme Court decision of Mansell v. Mansell 

(1989), 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675, which 

clearly directed State courts that a serviceperson's Veteran's 

Administration (VA) disability pay cannot be considered as part of 

a marital estate, courts must consider this type of disability pay 

when determining the parties' potential future income. Kenneth's 

receipt of VA disability pay means that he has at least a future 

income of about $2,000. 

Kenneth argues that the District Court did not err in 

excluding his disability pay from the marital estate. Kenneth also 

argues that the court properly considered the elements of 5 40-4- 

202, MCA, including potential future income. According to Kenneth, 

the District Court equitably apportioned the marital estate. 

Kenneth further asserts that the failure of the court to state with 
particularity each party's future acquisition of income is 

inconsequential. 

The District Court divided the marital property equally 

between the parties. First, we point out that on appeal to this 

Court, Elizabeth's counsel centers her argument on our Coower 

decision. The District Court did not cite Coo~er, it followed the 

earlier U.S. Supreme Court case of Mansell. Mansell interpreted 

portions of the federal Uniformed Services Former Spouses* 

Protection Act, 10 USC § 1408 (the Act.) 

We stated in Cooper: 

Robert's third citation of error concerns the inclusion 

of his military pension and disability benefits in the 

marital estate. It is well settled that military 

retirement benefits are a marital asset. In re the 

Marriage of Luisi (1988), 232 Mont. 243, 246, 756 P.2d 

456, 458-59. As concerns the disability benefits, the 

District Court may properly include in the marital estate 

any property "however and whenever acquired." Section 

40-4-202 (1) , MCA. The District Court awarded no portion 

of either asset to Linda. Both the military pension and 

disability benefits were properly included in the marital 

estate. 

Coower, 243 Mont. at 178-179, 793 P.2d at 812. Such inclusion in 

the marital estate of the l'VA1' disability benefits is an incorrect 

analysis of the law following the Mansell decision. Coower 

involved VA disability benefits and for this reason the Coo~er 

decision was incorrectly decided with regards to VA disability 

benefits. Cooper remains precedent for other kinds of military 

disability and for military retirement. 

The District Court here correctly placed precedent on 

Mansell s interpretation the Act and not our own Coower 

decision. The Mansell decision cited by the District Court as 
precedent for exclusion of Kennethls disability pay in the marital 

estate provides: 

. . . the question is one of statutory construction . . . . its language is both precise and limited. It 

provides that I1a court may treat disposable retired or 

retainer pay . . . . either as property solely of the 

member or as property of the member and his spouse in 

accordance with the law of the jurisdiction of such court . . . . The Act's definitional section specifically 

defines the term "disposable retired or retainer payw to 

exclude, inter alia, military retirement pay waived in 

order to receive veterans# disability paprents . . . . Thus, under the Act's plain and precise language, state 

courts have been granted the authority to treat 

disposable retired pay as community property . . . . not . . . . the authority to treat total retired pay as 

community property . . . . 

Mansell, 490 U.S. at 588-589, 109 S.Ct. at 2032, 104 L.Ed.2d at 

The Act defines the disposable retired or retainer pay as not 

including VA disability specifically. All other military 

disability pay and retirement pay may be considered by state courts 

as community property, i.e. divisible property. Mansell and the 

Act make it clear that the VA disability pay is personal to the 

service person and is meant to compensate the service personnel for 

his or her loss of working ability. 

The majority of jurisdictions which we researched, interpreted 

Mansell to bar inclusion of this personal pay in the total ascribed 

to the combined marital estate. In re Marriage of Kraft (Wash. 

1992), 832 P.2d 871; Rothwell v. Rothwell (Tex.App 1989), 775 

S.W.2d 888; Davis v. Davis (Ky. 1989), 777 S.W.2d 230; Jones v. 

Jones (Haw. App, 1989), 780 P.2d 581; Lambert v. Lambert (Va. App. 

1990), 395 S.E.2d 207; Riley v. Riley (Md.App. 1990), 571 A.2d 
1261; Murphy v. Murphy (Ark. 1990), 787 S.W.2d 684; In re Marriage 

of Franz (Col.App. 1992), 831 P.2d 917; Maxwell v. Maxwell (Utah 

App. 1990), 796 P.2d 403; Toupal v. Toupal (N.M. App. 1990), 790 

The Mansell Court was cognizant that the impact its 

interpretation of the Act could have on former spouses of service 

people could be adverse: 

We realize that reading the statute literally may inflict 

economic harm on many former spouses. But we decline to 

misread the statute in order to reach a sympathetic 

result . . . . Mansell, 490 U.S. at 594, 109 S.Ct. at 2036, 104 L.Ed.2d at 689. 

Despite its reluctance the Court held that: 

the Former Spouses1 Protection Act does not grant state 

courts the power to treat as property divisible upon 

divorce military retirement pay that has been waived to 

receive veterans disability benefits. (Emphasis added.) 

Mansell, 490 U.S. at 594-95, 109 S.Ct. at 2036, 104 L.Ed.2d at 689. 

The District Court correctly refused to include Kenneth's 

disability in the marital estate. We conclude it is necessary that 

we modify the Cooper decision to meet Mansell requirements. We 

hold that the Cooper decision is limited as follows: 

Our courts may not include in a marital estate military 

retirement pay which has been waived in order to receive 

veteransg disability benefits from the United States. 

Elizabeth argues that while Mansell is controlling, its holding 

does not prohibit this Court from consideration of Kenneth's 

disability as part of his potential future income. Our legislature 

has specifically provided that courts must consider the potential 

future earning power of the parties when making its division of the 
marital estate. Section 40-4-202, MCA. Kenneth's VA disability 

benefits are part of his future income earning potential. Here, 

the court considered the fact that Kenneth would have almost $2,000 

a month of income in the future for as long as he lived. 

While the court was presented with detailed information 

concerning Kenneth's present economic needs and potential for 

future income, it was not presented with such detailed information 

concerning Elizabeth's economic needs or future income. The court 

did find, and the record bears out, that Elizabeth earned about 

$500 per month and could live on that sum. 

We conclude that the court did not abuse its discretion in 

dividing the marital estate because it considered, pursuant to 9 

40-4-202, MCA, Kenneth's disability pay as well as what little 

information it was provided concerning Elizabeth's economic needs 

and income earning potential. We, therefore, hold that the court's 

findings of fact are not clearly erroneous and thus, the court did 

not abuse its discretion in dividing the marital estate or err in 

determining that under Mansell, Kenneth's disability should not be 

included in the total of the marital estate. 

Affirmed. 
Justices