In Re the Marriage of Murphy

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
Submitted on Briefs: June 10, 1993
NOV - 2 1993 Decided: November 2, 1993
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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 C o o ~ e r
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 d i v i s i b l e 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