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



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### 1993 Submitted on Briefs: June 10, 1993 Decided: November 2, 1993 Filed:

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# se.;r;t CLER~ PFSUPRLUE STATEOF M~H~~Justice Fred J. Weber delivered the Opinion of the Court.
This is an action from the Eighth Judicial District Court, CascadeCounty, grantingadissolutionand apportioningthemarital 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 themarital estate. Affirmed. We consider the following question on appeal: Did the District Court abuse its discretion in dividing themarital estate without sufficient considerationof theparties' opportunities for future income or by failing to consider Kenneth's VA disability benefits in themarital estate? Elizabeth A. Murphy (Elizabeth) and Kenneth 

### R. Murphy (Kenneth) weremarried on December 15, 1970 in Basle, Switzerland. Two children were born to the couple. Elizabeth did not work outside thehome during themarriage. Kenneth served in theUnited 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 thematter 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 orby failing toconsiderKenneth's VA 

### disability benefits in themarital estate? In considering a district court's division of marital property,wewill not discount the considerable discretionarypower that must be exercised by the district courts in these cases. Marriage of Hamilton (1992),254Mont. 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 reviewa district court's legaldeterminations 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 tomake an equitable division of property. Hamilton, 254 Mont. at 36, 835 P.2d at 704. These discretionary judgmentsmade 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 aspart of

amarital estate, courtsmust consider this typeof disabilitypay 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 disabilitypay fromthemarital estate. Kenneth also argues that the court properly considered the elements of 

### 5 40-4- 202, MCA, including potential future income. According toKenneth, the District Court equitably apportioned the marital estate. Kenneth further asserts thatthe failureof thecourt to statewithparticularity 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 (theAct.) 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 Courtmay properly include in themarital 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 themilitary pension and disability benefits wereproperly included inthemarital estate. Coower, 243 Mont. at 178-179, 793 P.2d at 812. Such inclusion in themarital 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 formilitary 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 asprecedent for exclusionof Kennethlsdisability pay in themarital estate provides:



# . . . the question is one of statutory construction 

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# . . its language is both precise and limited. It provides that I1acourt 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 lawof the jurisdictionof such court



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# . The Act's definitional section specifically defines the term "disposable retired or retainerpayw to exclude, inter alia, 

### military retirement pay waived in order to receive veterans#disability paprents

# .. .. Thus, under theAct's plain and precise language, state courts have been granted the authority to treat disposable retiredpay as community property 

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# .not



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# . the authority to treat total retired pay as community property 

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

TheAct defines thedisposable retired or retainerpay as not including VA disability specifically. All other military disabilitypay and retirementpay may be consideredby 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 ismeant tocompensatethe service personnel for his or her loss of working ability. Themajority of jurisdictions whichweresearched,interpreted Mansell tobar inclusion of thispersonal pay in thetotal 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.2d1261; Murphy v. Murphy (Ark. 1990), 787 S.W.2d 684; In reMarriage 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 readingthestatute literallymay inflict economic harm onmany 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 Spouses1ProtectionAct does not grant state courts the power to treat as property divisible upon divorcemilitary retirement pay that has been waived to receive veterans disabilitybenefits. (Emphasisadded.) Mansell, 490U.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 themarital 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 retirementpay which has been waived in order toreceive veteransgdisability benefits from the United States. Elizabeth argues that while Mansell is controlling, its holding does not prohibit this Court from consideration of Kenneth's disabilityaspart ofhis potential future income. Our legislature has specificallyprovided that courtsmust consider the potential future earningpower of thepartieswhen making itsdivision of themarital estate. Section 40-4-202, MCA. Kenneth's VA disability benefits are part of his future income earning potential. Here, the court consideredthe fact that Kennethwould 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 presentedwith suchdetailed 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 incomeearning potential. We, therefore,hold that thecourt's findings of fact are not clearly erroneous and thus, the court did not abuse its discretion in dividing themarital estate or err in determining that under Mansell, Kenneth's disability should not be included in the total of themarital estate. Affirmed.Justices