Michigan Supreme Court
Lansing, Michigan 48909
____________________________________________________________________________________________
C hief Justice Justices
Maura D. Cor rigan Michael F. Cavanagh
O pinion
Elizabeth A. Weaver
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman
____________________________________________________________________________________________________________________________
FILED JULY 25, 2002
JANICE TERRIEN, THOMAS HAGEN, and
JANET THOMAS,
Plaintiffs-Appellants,
v No. 115924
LAUREL ZWIT, TIM ZWIT, KEN CLARK,
and NICCI CLARK,
Defendants-Appellees.
BEFORE THE ENTIRE BENCH
MARKMAN, J.
We granted leave in this case to consider whether
covenants permitting only residential uses, and expressly
prohibiting commercial, industrial, or business uses, preclude
the operation of a “family day care home.” We also granted
leave to consider whether a covenant precluding such an
operation is unenforceable as violative of Michigan “public
policy.” The circuit court granted summary disposition in
favor of defendants, holding that a covenant precluding the
operation of a “family day care home” is contrary to the
public policy of the state of Michigan. The Court of Appeals
affirmed, but for a different reason. It held that the
operation of a “family day care home” is not precluded by such
covenants. It concluded that, because the operation of a
“family day care home” is a residential use, it could not also
be a commercial or business use because the two uses are
mutually exclusive. 238 Mich App 412; 605 NW2d 681 (1999).
We respectfully disagree with both lower courts. A covenant
barring any commercial or business enterprises is broader in
scope than a covenant permitting only residential uses.
Furthermore, covenants such as these do not violate Michigan
public policy and are enforceable. Accordingly, we reverse
the decision of the Court of Appeals and remand this case to
the circuit court for entry of an order granting summary
disposition in favor of plaintiffs.
I. FACTS AND PROCEDURAL HISTORY
All parties in this case own homes within the Spring
Valley Estates subdivision in Fruitland Township.1 Defendants
each operate licensed “family day care homes” pursuant to MCL
1
In the circuit court, the parties stipulated the
essential facts. It is also undisputed that defendants ran
the “family day care homes” for profit.
2
722.111 et seq. in their homes within the subdivision.2 The
subdivision is subject to the following covenants:
1. No part of any of the premises above described
may or shall be used for other than private
residential purposes.
* * *
3. No lot shall be used except for residential
purposes.
* * *
14. No part or parcel of the above-described
premises shall be used for any commercial,
industrial, or business enterprises nor the storing
of any equipment used in any commercial or
industrial enterprise.[3]
Plaintiffs sought an injunction prohibiting the continued
operation of defendants’ “family day care homes.” The parties
agreed to file cross-motions for summary disposition before
engaging in discovery. Plaintiffs moved for partial summary
disposition pursuant to MCR 2.116(C)(9), and defendants moved
for summary disposition pursuant to MCR 2.116(C)(8) and (10).
The circuit court denied plaintiffs’ motion and granted
defendants’ motion, finding that a “covenant precluding the
operation of a family day care home in a residential setting
2
“Family day care home” means a “private home in which
1 but fewer than 7 minor children are received for care and
supervision for periods of less than 24 hours a day . . . .”
[MCL 722.111(f)(iii).]
3
These covenants are in the form of plat restrictions
that attached to the parties’ property by operation of the
doctrine of reciprocal negative easement.
3
is contrary to the public policy of the State of Michigan.”
The Court of Appeals affirmed this decision. However, instead
of invalidating the covenants as being against public policy,
the Court concluded that defendants’ operation of “family day
care homes” did not violate the covenants. This Court granted
plaintiffs’ application for leave to appeal.
II. STANDARD OF REVIEW
Because the parties have stipulated the essential facts,
our concern here is only with the law: specifically, whether
covenants permitting only residential uses, and expressly
prohibiting commercial, industrial, or business uses, preclude
the operation of a “family day care home,” and, if so, whether
such a restriction is unenforceable as against “public
policy.” These are questions of law that are reviewed de
novo, Kelly v Builders Square, Inc, 465 Mich 29, 34; 632 NW2d
912 (2001), which standard is identical to the standard of
review for grants or denials of summary disposition.
MacDonald v PKT, Inc, 464 Mich 322, 332; 628 NW2d 33 (2001).
III. ANALYSIS
A. COVENANTS
We granted leave in this case to consider whether the
operation of a “family day care home” violates covenants
permitting only residential uses and prohibiting commercial,
industrial, or business uses. Further, assuming arguendo that
such activities do violate the covenant, the question becomes
4
whether the covenant is unenforceable because it violates some
“public policy” in favor of day care facilities. In Beverly
Island Ass’n v Zinger, 113 Mich App 322; 317 NW2d 611 (1982),
the Court of Appeals addressed a somewhat similar issue.
There, the Court, faced with a narrower covenant that
permitted only residential uses, concluded that the operation
of a “family day care home” did not violate that covenant.4
Stressing the relatively small scale of the particular day
care operation and that “[t]he only observable factor which
would indicate to an observer that defendants do not simply
have a large family is the vehicular traffic in the morning
and afternoon when the children arrive and depart,” id. at
328, the Court found this sort of day care use to be
residential in nature, and thus not a use in violation of the
covenant.
Beverly Island was relied upon by the Court of Appeals in
the instant matter to conclude that the day care use here was
not violative of the covenants at issue. However, such
reliance was misplaced, in our judgment, because, the covenant
at issue in Beverly Island merely prohibited nonresidential
uses, whereas the covenants at issue here prohibit not only
nonresidential uses, but also any commercial, industrial, or
4
The covenant at issue in Beverly Island, supra at 324,
provided in relevant part that “[n]o lot or building plot
shall be used except for residential purposes.”
5
business uses as well. There is a significant distinction
between such restrictions, as more is prohibited in our case
then was prohibited in Beverly Island. Not only did
defendants in this case covenant not to use their property for
nonresidential uses, but they also covenanted not to use their
property for commercial, industrial, or business uses.
Interestingly, the Beverly Island Court itself recognized
the distinction between a covenant permitting only residential
uses and one that also expressly prohibits commercial,
industrial, or business uses. Before it even began its
analysis, the Beverly Island Court noted that the covenant at
issue “permits residential uses rather than prohibiting
business or commercial uses.” Id. at 326. It further
recognized that a “restriction allowing residential uses
permits a wider variety of uses than a restriction prohibiting
commercial or business uses.” Id. While the former
proscribes activities that are nonresidential in nature, the
latter proscribes activities that, although perhaps
residential in nature, are also commercial, industrial, or
business in nature as well. The distinction between the
covenants at issue here and the one at issue in Beverly Island
was not viewed as persuasive by the Court of Appeals in this
5
case.
5
The Court referenced the statement made by the Beverly
Island Court that recognized the difference between such
6
The Court of Appeals in this case reasoned that, because
the operation of a “family day care home” does not violate a
covenant permitting only residential uses,6 the operation of
a “family day care home” also does not violate a covenant
prohibiting commercial, industrial, or business uses. We
disagree with such reasoning. Because these are separate and
distinct covenants, that an activity complies with one does
not necessarily mean that the same activity complies with the
other. In other words, an activity may be both residential in
nature and commercial, industrial, or business in nature.
Therefore, Beverly Island simply does not answer the
question raised here. We must determine whether the operation
of a “family day care home” violates covenants prohibiting
both nonresidential uses and commercial, industrial, or
business uses. We find that it does.
The operation of a “family day care home” for profit is
a commercial or business use of one’s property. We find this
to be in accord with both the common and the legal meanings of
covenants, but stated that this statement was “mere dicta,”
and thus refused to follow it. Terrien, supra at 416-417.
6
The only issue raised by this case is whether the
operation of a “family day care home” violates covenants
permitting only residential uses and prohibiting commercial,
industrial, or business uses. Accordingly, that is the only
issue we address. In particular, we do not address whether
the operation of a “family day care home” violates the single
covenant permitting only residential uses, i.e., the issue
addressed by the Court of Appeals in Beverly Island.
7
the terms “commercial” and “business.” “Commercial” is
commonly defined as “able or likely to yield a profit.”
Random House Webster’s College Dictionary (1991). “Commercial
use” is defined in legal parlance as “use in connection with
or for furtherance of a profit-making enterprise.” Black’s
Law Dictionary (6th ed). “Commercial activity” is defined in
legal parlance as “any type of business or activity which is
carried on for a profit.” Id. “Business” is commonly defined
as “a person . . . engaged in . . . a service.” Random House
Webster’s College Dictionary (1991). “Business” is defined in
legal parlance as an “[a]ctivity or enterprise for gain,
benefit, advantage or livelihood.” Black’s Law Dictionary (6th
ed).
This Court has previously discussed the meaning of
“commercial” activity in a related context. In Lanski v
Montealegre, 361 Mich 44; 104 NW2d 772 (1960), this Court
addressed whether the operation of a nursing home was in
violation of a reciprocal negative easement prohibiting
commercial activity upon certain property. We determined that
it was, observing that the circumstances were indicative of a
“general plan for a private resort area” and that this
suggested that a broad definition of “commercial” activity was
intended. Id. at 49 (emphasis in the original). Therefore,
“[i]n its broad sense commercial activity includes any type of
8
business or activity which is carried on for a profit.” Id.
We concluded that the operation of a nursing home was a
commercial use because a fee was charged, a profit was made,
the services were open to the public, and such an operation
subtracted from the “general plan of the private,
noncommercial resort area originally intended.” Id. at 50.
The facts here indicate that a similar definition of
commercial activity was intended. Not only does the covenant
here prohibit commercial or business activities, it also
prohibits the mere “storing of any equipment” used in such
activities. This is a strong and emphatic statement of the
restrictions’ intent to prohibit any type of commercial or
business use of the properties. Defendants here, through the
operation of “family day care homes” are providing a service
to the public in which they are making a profit.7 Clearly,
such use of their properties is a commercial or business use,
as those terms are commonly and legally understood.
It is of no moment that, as defendants assert, the
“family day care homes” cause no more disruption than would a
large family or that harm to the neighbors may not be
tangible. As we noted in Austin v VanHorn, 245 Mich 344, 347;
222 NW 721 (1929), “the plaintiff’s right to maintain the
restrictions is not affected by the extent of the damages he
7
We note that the operation of a “family day care home”
requires a license and is regulated by the state.
9
might suffer for their violation.” This all comes down to the
well-understood proposition that a breach of a covenant, no
matter how minor and no matter how de minimis the damages, can
be the subject of enforcement. As this Court said in
Oosterhouse v Brummel, 343 Mich 283, 289; 72 NW2d 6 (1955),
“‘If the construction of the instrument be clear and the
breach clear, then it is not a question of damage, but the
mere circumstance of the breach of the covenant affords
sufficient ground for the Court to interfere by injunction.’”
(Citations omitted.)
B. PUBLIC POLICY
Defendants further contend that, even if the covenant
here does prohibit the operation of these day care facilities,
such a restriction should be unenforceable as against “public
policy.” The circuit court agreed, while the Court of Appeals
did not find it necessary to reach this issue.8
To determine whether the covenant at issue runs afoul of
8
The Court of Appeals indicated that Michigan public
policy does, in fact, favor “family day care homes.” It then
concluded that, in light of this public policy, as well as the
fact that the operation of a “family day care home” is
residential in nature, defendants’ property use did not
violate the covenants. However, rather than relying on public
policy to conclude that a covenant prohibiting the operation
of a “family day care home” was unenforceable, as the circuit
court did, the Court of Appeals relied on public policy to
conclude that the covenants here did not prohibit the
operation of a “family day care home.”
10
the public policy of the state,9 it is first necessary to
discuss how a court ascertains the public policy of the state.
In defining “public policy,” it is clear to us that this term
must be more than a different nomenclature for describing the
personal preferences of individual judges, for the proper
exercise of the judicial power is to determine from objective
legal sources what public policy is, and not to simply assert
what such policy ought to be on the basis of the subjective
views of individual judges. This is grounded in Chief Justice
Marshall’s famous injunction to the bench in Marbury v
Madison, 5 US (1 Cranch) 137, 177; 2 L Ed 60 (1803), that the
duty of the judiciary is to assert what the law “is,” not what
it “ought” to be.
In identifying the boundaries of public policy, we
believe that the focus of the judiciary must ultimately be
upon the policies that, in fact, have been adopted by the
public through our various legal processes, and are reflected
in our state and federal constitutions, our statutes, and the
common law.10 See Twin City Pipe Line Co v Harding Glass Co,
9
Covenants that are against “public policy” are
unenforceable. “The principle that contracts in contravention
of public policy are not enforceable should be applied with
caution and only in cases plainly within the reasons on which
that doctrine rests.” Twin City Pipe Line Co v Harding Glass
Co, 283 US 353, 356-357; 51 S Ct 476; 75 L Ed 1112 (1931);
Skutt v Grand Rapids, 275 Mich 258, 264; 266 NW 344 (1936).
10
For instance, a racial covenant would be clearly
unenforceable on this basis. See Shelley v Kraemer, 334 US 1;
11
283 US 353, 357; 51 S Ct 476; 75 L Ed 1112 (1931). The public
policy of Michigan is not merely the equivalent of the
personal preferences of a majority of this Court; rather, such
a policy must ultimately be clearly rooted in the law. There
is no other proper means of ascertaining what constitutes our
public policy.11 As this Court has said previously:
“As a general rule, making social policy is a
job for the Legislature, not the courts. This is
especially true when the determination or
resolution requires placing a premium on one
societal interest at the expense of another: ‘The
responsibility for drawing lines in a society as
complex as ours—of identifying priorities, weighing
the relevant considerations and choosing between
competing alternatives—is the Legislature’s, not
the judiciary’s.’” [Van v Zahorik, 460 Mich 320,
327; 597 NW2d 15 (1999)(citations omitted).]
Instructive to the inquiry regarding when courts should
refrain from enforcing a covenant on the basis of public
policy is W R Grace & Co v Local Union 759, 461 US 757, 766;
103 S Ct 2177; 76 L Ed 2d 298 (1983), in which the United
States Supreme Court said that such a public policy must not
only be “explicit,” but that it also “must be well defined and
68 S Ct 836; 92 L Ed 1161 (1948)(interpreting the Equal
Protection Clause, US Const, Am XIV); Hurd v Hodge, 334 US 24;
68 S Ct 847; 92 L Ed 1187 (1948)(interpreting the Civil Rights
Act of 1866); the federal Fair Housing Act, 42 USC 3601 et
seq.; Michigan’s Civil Rights Act, MCL 37.2101 et seq.; and
the housing provisions of Michigan’s Civil Rights Act, MCL
37.2501 et seq.
11
We note that, besides constitutions, statutes, and the
common law, administrative rules and regulations, and public
rules of professional conduct may also constitute definitive
indicators of public policy.
12
dominant . . . .”12 As the United States Supreme Court has
further explained:
Public policy is to be ascertained by
reference to the laws and legal precedents and not
from general considerations of supposed public
interests. As the term “public policy” is vague,
there must be found definite indications in the law
of the sovereign to justify the invalidation of a
contract as contrary to that policy. [Muschany v
United States, 324 US 49, 66; 65 S Ct 442; 89 L Ed
744 (1945).][13]
This Court has found no “definite indications in the law” of
12
In Eastern Ass’n Coal Corp v United Mine Workers of
America, District 17, 531 US 57, 68; 121 S Ct 462; 148 L Ed 2d
354, Justice Scalia observed in a concurring opinion that
“[t]here is not a single decision, since this Court washed its
hands of general common-lawmaking authority, in which we have
refused to enforce on ‘public policy’ grounds an agreement
that did not violate, or provide for the violation of, some
positive law.” [Citation omitted.] “The problem with judicial
intuition of a public policy that goes beyond the actual
prohibitions of the law is that there is no way of knowing
whether the apparent gaps in the law are intentional or
inadvertent.” Id.
13
“The meaning of the phrase ‘public policy’ is vague and
variable; courts have not defined it, and there is no fixed
rule by which to determine what contracts are repugnant to
it.” Twin City, supra at 356. As an illustration of such
vagueness, “public policy” has been described as the
“community common sense and common conscience” and as
“abid[ing] only in the customs and conventions of the people—
in their clear consciousness and conviction of what is
naturally and inherently just and right between man and man.”
Skutt v Grand Rapids, 275 Mich 258, 264; 266 NW 344 (1936).
Justice Kelly’s dissenting opinion relies upon this definition
of public policy in concluding that the covenant here is
unenforceable. However, we disagree with such a nebulous
definition because it would effectively allow individual
judges discretion to substitute their own personal preferences
for those of the public expressed through the regular
processes of the law. Instead, we believe that public policy
is defined by reference to the laws actually enacted into
policy by the public and its representatives.
13
Michigan to justify the invalidation of a covenant precluding
the operation of “family day care homes.” Indeed, nothing has
been cited, nor does our research yield anything in our
constitutions, statutes, or common law that supports
defendants’ view that a covenant prohibiting “family day care
homes” is contrary to the public policy of Michigan.
Defendants contend that “family day care homes” are a
“favored use” of property, and a restriction against such a
use, therefore, violates public policy.14 Amorphous as that
claim may be, even if it is true that “family day care homes”
may be permitted or even encouraged by law, it does not follow
that such use is a favored one. Additionally, that “family
day care homes” are permitted by law does not indicate that
private covenants barring such business activity are contrary
to public policy.15 What is missing from defendants’ argument
14
The county zoning act, MCL 125.216g(2), and the
township zoning act, MCL 125.286g(2), state that a “family day
care home” “shall be considered a residential use of property
for the purposes of zoning . . . .”
15
This Court has held that the favoring of a use does not
mean that such a use cannot be denied with regard to a
particular parcel of land. Kropf v Sterling Heights, 391 Mich
139, 156-157; 215 NW2d 179 (1973). In Kropf, this Court
concluded that a municipality can, by way of a local zoning
ordinance, prohibit a “favored use” on a particular parcel of
land. Similarly, private parties can, by way of a covenant,
agree to prohibit a “favored use” on a particular parcel of
land. Therefore, even if the operation of “family day care
homes,” is a “favored use,” this is an insufficient reason for
disregarding a covenant prohibiting the operation of “family
day care homes” on the subject property. See Johnstone v
Detroit, G H & M R Co, 245 Mich 65, 73-74; 222 NW 325 (1928).
14
is some “definitive indication” that to exclude “family day
care homes” from an area by contract is incompatible with the
law.16 There is a significant distinction between something
being permitted or even encouraged by law and something being
required or prohibited by law.
To fail to recognize this distinction would accord the
judiciary the power to examine the wisdom of private contracts
in order to enforce only those contracts it deems prudent.
However, it is not “the function of the courts to strike down
private property agreements and to readjust those property
rights in accordance with what seems reasonable upon a
detached judicial view.” Oosterhouse, supra at 289-290.
Rather, absent some specific basis for finding them unlawful,
courts cannot disregard private contracts and covenants in
order to advance a particular social good. See Johnstone v
Detroit, G H & M R Co, 245 Mich 65, 73-74; 222 NW 325 (1928).17
As we said in Oosterhouse, supra at 288, “[w]e do not
substitute our judgment for that of the parties, particularly
16
For example, a covenant requiring “x” or “y” would
be incompatible with a law or constitutional provision
prohibiting “x” or “y;” and a covenant prohibiting “x” or “y”
would be incompatible with a law or constitutional provision
requiring “x” or “y.”
17
In Johnstone, this Court concluded that the owners of
property in a subdivision subject to a covenant restricting
use of property to residence purposes were entitled to just
compensation upon the taking of part of such subdivision for
public use in violation of such restriction.
15
where, as in the instant case, restrictive covenants are the
means adopted by them to secure unto themselves the
development of a uniform and desirable residential area.”
Instead, we conclude that, if covenants that prohibit “family
day care homes” should not be enforced on public policy
grounds, such a decision should come from the Legislature, not
the judiciary.18 The Legislature may think that it is wise to
bar such covenants, but until it does so, we cannot say that
they are contrary to public policy. See Muschany, supra at
65.
Further, although the circuit court and the Court of
Appeals in this case considered what they viewed as the public
policy in favor of “family day care homes,” they neglected to
even mention the strong competing public policy, which is
well-grounded in the common law of Michigan, supporting the
right of property owners to create and enforce covenants
affecting their own property.19 Wood v Blancke, 304 Mich 283,
18
For example, the California, Minnesota, and New Jersey
Legislatures have enacted provisions voiding any covenants
that prohibit “family day care homes.” See Cal Health &
Safety Code, § 1597.40; Minn Stat 245A.11(2); NJ Stat 40:55D
66.5b(a).
19
Indeed, the importance of enforcing covenants is deeply
entrenched in our common law. As early as 1928, it has been
expressly held to be the common law of this state. Johnstone,
supra at 74. Undergirding this right to restrict uses of
property is, of course, the central vehicle for that
restriction: the freedom of contract, which is even more
deeply entrenched in the common law of Michigan. See McMillan
v Mich S & N I R Co, 16 Mich 79 (1867). Justice Kelly’s
16
287-288; 8 NW2d 67 (1943). It is a fundamental principle,
both with regard to our citizens’ expectations and in our
jurisprudence, that property holders are free to improve their
property. We have said that property owners are free to
attempt to enhance the value of their “property in any lawful
way, by physical improvement, psychological inducement,
contract, or otherwise.” Johnstone, supra at 74-75 (emphasis
added). Covenants running with the land are legal instruments
utilized to assist in that enhancement. A covenant is a
contract created with the intention of enhancing the value of
property, and, as such, it is a “valuable property right.”
City of Livonia v Dep’t of Social Services, 423 Mich 466, 525;
378 NW2d 402 (1985).20 “The general rule [of contracts] is
that competent persons shall have the utmost liberty of
contracting and that their agreements voluntarily and fairly
made shall be held valid and enforced in the courts.” Twin
City, supra at 356; see also Port Huron Ed Ass’n v Port Huron
dissenting opinion dismisses these public policies in a short
footnote.
Further, although this case implicates several claims to
public policy, our resolution of this case does not require us
to balance competing public policies because, as discussed
above, the claim that a covenant precluding the operation of
“family day care homes” violates public policy is flawed.
20
“Restrictions for residence purposes are particularly
favored by public policy and are valuable property rights.”
City of Livonia, supra at 525.
17
Area School Dist, 452 Mich 309, 319; 550 NW2d 228 (1996),
quoting Dep’t of Navy v Federal Labor Relations Authority, 295
US App DC 239, 248; 962 F2d 48 (1992)(discussing the
“fundamental policy of freedom of contract” under which
“parties are generally free to agree to whatever specific
rules they like”).
Moreover, “[r]estrictions for residence purposes, if
clearly established by proper instruments, are favored by
definite public policy. The courts have long and vigorously
enforced them by specific mandate.” Johnstone, supra at 74.
The covenants at issue here are of this sort. They expressly
prohibit nonresidential uses, as well as commercial,
industrial, or business uses. Clearly, the intention was to
limit the use of the property in order to maintain a
residential neighborhood of a specific character. As we said
in Signaigo v Begun, 234 Mich 246, 250; 207 NW 799 (1926),
“[t]he right, if it has been acquired, to live in a district
uninvaded by stores, garages, business and apartment houses is
a valuable right.” Further, this Court “has not hesitated in
proper cases to restrain by injunction the invasion of these
valuable property rights.” Id. at 251. Moreover, the
“nullification of [such] restrictions [would be] a great
injustice to the owners of property,” Wood, supra at 287,
because “the right of privacy for homes is a valuable right.”
Johnstone, supra at 74. It is the function of the courts to
18
protect such rights through the enforcement of covenants.
Wood, supra at 287-288.
Here, we conclude that a covenant precluding the
operation of a “family day care home” is not violative of the
public policy of our state because there are no “definite
indications” in our law of any public policy against such a
covenant. Indeed, there is considerable public policy
regarding the freedom of contract that affirmatively supports
the enforcement of such a covenant.
IV. RESPONSE TO DISSENTS
A. JUSTICE KELLY ’S DISSENT
1. Covenants
Justice Kelly’s dissent first concludes that “family day
care homes” are “residential in nature.” Post at 1. However,
as we have already pointed out, the issue here is not whether
the operation of a “family day care home” is a residential
use. Rather, the issue is whether such an operation is a
commercial or business use. As we explained above,
residential and commercial or business uses of property are
not mutually exclusive; an activity may be both residential in
nature and commercial or business in nature. Therefore, the
dissent’s assertion that “family day care homes” are
residential in nature simply is irrelevant here, where the
issue is whether the operation of a “family day care home”
19
violates a covenant prohibiting commercial or business uses.21
The dissent next concludes that “family day care homes”
“do not violate restrictive covenants prohibiting commercial
and business use.” Post at 1. Inherent in this conclusion is
that the operation of a “family day care home” is not a
commercial or business use.22 As discussed above, we disagree.
The dissent criticizes us for placing “great weight on
compensation,” post at 2, in determining that the operation of
a “family day care home” is a commercial or business use.
However, it provides no explanation as to why this is an
inappropriate consideration. In Lanski, supra at 49, in
determining that the operation of a nursing home was a
commercial use, this Court observed that “[a] fee is charged
and a profit is made.” The same is true here. The intent to
make a profit is quite obviously an important element in
identifying what constitutes a commercial or business
21
The dissent again fails to recognize this distinction
when it states later that “it is impossible to conclude from
the record that the family day-care homes do not conform to
the ordinary and common meaning of ‘use for residential
purposes.’” Post at 4.
22
We find it interesting that, although the dissent
states that “family day care homes” are “residential in
nature” and that they “do not violate restrictive covenants
prohibiting commercial and business use,” post at 1, the
dissent never comes right out and states that the operation of
a “family day care home” is not a commercial or business use.
Perhaps, such a straightforward statement of the dissent’s
ultimate conclusion would call attention to the flaws
underlying such a conclusion.
20
enterprise.23
The dissent next asserts that “land use should be
characterized according to how the activity involved there
affects the general plan of the area” rather than “the narrow
approach of the majority.” Post at 3. However, the approach
that this majority has adopted is simply that, when parties
enter into contracts to prohibit commercial or business uses
on their properties, commercial or business uses on their
properties will be prohibited.
Further, lest the dissent obscure this issue, we point
out once more that the covenant before this Court states that
the parties’ properties are not to “be used for any
commercial, or business enterprises.” It does not state, as
the dissent would have us understand, that the parties’
properties are not to be used for any commercial, or business
23
The dissent relies on City of Livonia in an attempt to
downplay the relevance of an intent to make a profit.
However, the dissent fails to recognize a critical distinction
between City of Livonia and the present case. In City of
Livonia, the issue was whether the operation of an adult
foster care home violated a covenant prohibiting
nonresidential use, while the issue in the instant case is
whether the operation of a “family day care home” violates a
covenant prohibiting commercial or business uses. The Court
in City of Livonia concluded that the operation of an adult
foster care home was not a nonresidential use, despite the
fact that its patients were required to pay for goods and
services obtained there. We agree that the receipt of
compensation does not necessarily make an activity
nonresidential in nature. However, whether compensation is
received plays a far more critical role in the determination
of whether an activity is a commercial or business use.
21
enterprises that affect the general plan of the area or has a
visible adverse effect on the residential character of the
neighborhood. See post at 3, 6. Under the plain language of
the covenant before this Court, not the covenant apparently
preferred by the dissent, the parties’ properties may not be
used to operate a commercial or business enterprise. Period.24
In an effort apparently to “improve” upon the actual contract
created by the parties, the dissent reads words into the
covenant that simply are not there.25
The dissent justifies its amending from the bench by
asserting that “[t]he absence of a definition in the
restrictive covenants” of the terms “commercial, industrial,
or business enterprises” leaves these terms ambiguous, and
24
The dissent’s statement that the land use here is not
commercial or business in nature because “no showing has been
made that the operation of defendants’ family day-care homes
had any effect on the overall residential character of their
neighborhood,” post at 3-4, is, therefore, a non-sequitur.
Further, as we have explained, plaintiffs’ right to enforce
the covenant, as written, does not depend on whether
defendants’ violations of the covenant have harmed plaintiffs,
although the fact that plaintiffs have initiated this lawsuit
and pursued it to this Court suggests that the impact of
defendants’ activities upon plaintiffs are not viewed as
benignly by the latter as they are by the dissent.
25
The dissent characterizes the effect of our decision
as imposing an “absolute prohibition” upon “family day care
homes” on the parties’ properties, and further characterizes
this as the “majority’s absolute prohibition.” Post at 6. We
feel impelled, however, to point out to the dissent that this
is the parties’, not the “majority’s,” prohibition. The
parties, not this Court, are the lawmakers with regard to the
terms of their own contracts.
22
thus “opens the terms to judicial interpretation.” Post at 6.
We find this to be a remarkable proposition of law, namely,
that the lack of an explicit internal definition of a term
somehow equates to ambiguity—an ambiguity that apparently, in
this case, allows a court free rein to conclude that a
contract means whatever the court wants it to mean. Under the
dissent’s approach, any word that is not specifically defined
within a contract becomes magically ambiguous.26 If that were
the test for determining whether a term is ambiguous, then
virtually all contracts would be rife with ambiguity and,
therefore, subject to what the dissent in “words mean whatever
I say they mean” fashion describes as “judicial
interpretation.” However, fortunately for the ability of
millions of Michigan citizens to structure their own personal
and business affairs, this is not the test. As this Court has
repeatedly stated, the fact that a contract does not define a
relevant term does not render the contract ambiguous.
Henderson v State Farm Fire & Casualty Co, 460 Mich 348, 354;
596 NW2d 190 (1999).27 Rather, if a term is not defined in a
26
Presumably, the dissent would apply this same novel
approach to the interpretation of statutes. We note that this
would be contrary to MCL 8.3a, which provides that “[a]ll
words and phrases shall be construed and understood according
to the common and approved usage of the language . . . .”
27
This Court has further observed with respect to
insurance contracts, “[o]mitting the definition of a word that
has a common usage does not create an ambiguity within the
policy.” Group Ins Co v Czopek, 440 Mich 590, 596; 489 NW2d
23
contract, we will interpret such term in accordance with its
“commonly used meaning.” Id.; Frankenmuth Mutual Ins Co v
Masters, 460 Mich 105, 113-114; 595 NW2d 832 (1999).
The contract in this case clearly prohibits commercial or
business uses on the covered properties. Equally clearly, the
operation of a “family day care home” that makes a profit by
providing a service to the public is a commercial or business
use. That these interpretations should appear to the dissent
to be overly “conclusory” is only, perhaps, because they
involve such simple and unremarkable propositions of law.
2. PUBLIC POLICY
The dissent also concludes that, even if the covenant
here does preclude the operation of “family day care homes,”
such a preclusion is contrary to public policy, and thus
unenforceable. Post at 7. As we have already made clear, we
respectfully disagree.
The dissent suggests that we unnecessarily limit our
understanding of public policy to “express statutory
mandates.” Post at 10. However, as we have already
explained, our view, as well as that of the United States
Supreme Court, is simply that public policy must be derived
444 (1992). “[S]imply because a policy does not define a term
does not render the policy ambiguous.” Auto Club Group Ins Co
v Marzonie, 447 Mich 624, 631; 527 NW2d 760 (1994). “Instead,
absent a policy definition, terms are ‘given a meaning in
accordance with their common usage.’” Id. (citation omitted).
24
from “definite indications” in the law. While the dissent
would refuse to enforce the instant covenant absent any
“definite indication” in the law, much less any “express
statutory mandate,” that such a covenant contravenes any
public policy, we view it as our obligation to enforce a
covenant under these circumstances.
As the dissent itself acknowledges, public policy is the
“foundation” of our constitutions, statutes, and common law.
Post at 8. It is precisely because of this truth that a
contract that does violate public policy is unenforceable.
However, it is also because of this truth that, where an
actual public policy exists, rather than simply a personal
policy preference of a judge, “definite indications” of an
actual public policy will be found in our laws.
The dissent asserts that the majority’s opinion
“eviscerates the public policy doctrine” and is “contrary to
this Court’s long established practice.” Post at 1, 12. Once
more, we disagree. This opinion merely sets forth the
unexceptional proposition that an assertion of public policy
as a basis for nullifying a contract must, in fact, be
grounded in a public policy. If not grounded in the
constitution, the statutes, or the common law of this state,
we are curious as to the dissent’s basis for asserting that a
policy is truly a “public” policy as opposed to merely a
judge’s own preferred policy. It is hard to think of a
25
proposition less compatible with the “rule of law” and more
compatible with the “rule of men” than that a judge may
concoct “public policies” from whole cloth, rather than from
actual sources of the law.28
Finally, the dissent concludes that “restrictive
covenants prohibiting family day-care homes are contrary to
our state’s public policy and are unenforceable.” Post at 10.
However, the only evidence that the dissent points to
establishes, at most, that “family day care homes” are
supported, or even encouraged, by public policy,29 not that
covenants which limit “family day care homes” upon private
properties are contrary to public policy. Such evidence
28
The dissent remarkably criticizes the majority opinion
because it will have “negative implications regarding the free
use of land,” post at 12. Needless to say, we have a rather
different view than the dissent of what promotes the “free use
of land.” We respectfully suggest that a legal regime in
which contract and property rights are respected is one more
conducive to this end than a regime in which contract and
property rights are subject to the arbitrary vetoes of judges
deriving new “public policies” from their own consciences.
29
The principal evidence that the dissent marshals for
its conclusion that this covenant violates public policy is
that the Legislature has chosen to regulate “family day care
homes,” that the executive branch has established an advisory
committee on day care for children, and that the Court of
Appeals has said in dictum that “family day care homes” are
favored by our public policy. See also note 30. It is not
clear how any of this evidence “definitely indicates” a public
policy against covenants that prohibit “family day care
homes.” Again, even if public policy does favor such homes,
this is a considerably different proposition from one that
private parties are prohibited from freely entering into
agreements not to use their properties for the operation of
such homes.
26
certainly does not provide any “definite indication” that a
covenant, freely entered into by private parties, prohibiting
the operation of “family day care homes” on their properties,
violates public policy.30
In summary, in the name of “public policy”—a “public
policy” nowhere to be found in the actual laws of Michigan—
the dissent would impose its own preferences for how a
contract ought to read in place of the preferences of the
parties themselves.31
30
The dissent also relies on zoning statutes to reach its
conclusion that this covenant violates public policy. Post
at 9. However, we also question the relevance of this factor.
First, these statutes merely provide that “family day care
homes” are to “be considered a residential use of property for
the purposes of zoning . . . .” MCL 125.216g(2), MCL
125.286g(2)(emphasis added). They do not state that “family
day care homes” are not a commercial or business use. Second,
it is well settled that zoning statutes do “not purport to
regulate private restrictive covenants.” City of Livonia,
supra at 525. “‘Zoning laws determine property owners’
obligations to the community at large, but do not determine
the rights and obligations of parties to a private contract.’”
Id., quoting Rofe v Robinson, 415 Mich 345, 351; 329 NW2d 704
(1982). Therefore, “definitions adopted for legislative
purposes in housing codes and zoning ordinances [cannot] be
employed in interpreting restrictive covenants.” Oosterhouse,
supra at 290.
31
Concerning the dissent’s accusation that this majority
“engrafts its own version of what the law should be,” and that
our opinion is the “embodiment of judge-made law,” post at 12,
in amazement, we can do little more than repeat what we said
in Robertson v DaimlerChrysler Corp, 465 Mich 732, 762; 641
NW2d 567 (2002), inviting the “reader, and the citizens of
Michigan, in evaluating these opinions, to reflect upon” which
approach to judging is more conducive to these results—an
approach in which “public policy” is determined on the basis
of policies actually enacted into law by the representatives
of the public, or an approach in which “public policy” is
27
B. JUSTICE WEAVER ’S DISSENT
Justice Weaver’s dissent sets forth two arguments that
have not elsewhere been addressed in this opinion:
First, the dissent suggests that, in order to determine
whether an activity is commercial or business in nature, this
Court must inquire into the type of neighborhood to which the
covenant applies. We do not understand the relevance of this
inquiry. The covenant here prohibits commercial or business
uses. This language could not be more direct or
straightforward. We do not understand how, for example, a
commercial dry cleaner is transformed from a “business” into
a non-“business” because the surrounding neighborhood is
middle-income or lower middle-income, because its lots are
larger or smaller, because its residents are predominantly
younger or older, or because its shrubbery is or is not well
tended. Rather, a business is a business, quite without
reference to the type of neighborhood in which it is situated.
If there is, in fact, some relevance to be derived from all
these things that comprise a neighborhood in defining
“business,” the dissent does not tell us what this might be.
The dissent offers no factors or criteria for a court to
evaluate, it offers no guidance as to the particular
fashioned out of thin air by judges and used to defeat the
contracts and covenants freely entered into by the people of
this state.
28
circumstances that should be reviewed by a court in its
analysis, and it offers no direction regarding when a court
should conclude that a 7-11 store, a beauty shop, or an auto
body facility has been transformed into a non-“business”
because of its location.
Indeed, the irrelevance of the dissent’s inquiry is
underscored by the obvious fact that the covenant here was
only applied specifically to a single “neighborhood”—what was
within the scope of the covenant. There are not one hundred
different neighborhoods here in which “business,” at least in
the dissent’s view, might mean something different in each
instance. Rather, there is a one neighborhood to which the
covenant applies, and there is not the slightest indication in
the covenant that this altogether ordinary term, “business,”
was intended to mean anything other than what every person in
Fruitland Township, or anywhere else in the state of Michigan,
would understand it to mean. One would suppose that, had the
type of neighborhood been relevant to an understanding of
“business,” the parties who joined into this covenant might
have offered some guidance in this regard, since there is only
one “type of neighborhood” to which such guidance would have
been required. However, no evidence exists that these parties
intended any of their words to have secret meanings, or to
communicate something other than their ordinary meanings.
Further, we are not persuaded by the case cited by the
29
dissent in support of its proposition that whether an activity
constitutes a “business” depends on the type of neighborhood
to which the covenant applies. The dissent cites Brown v
Hojnacki, 270 Mich 557, 561; 259 NW 152 (1935), in which this
Court concluded that it was “too plain for argument” that the
activity at issue there, a massage parlor, constituted a
“business house of any kind,” and thereby violated a covenant
prohibiting the latter. In reaching this conclusion, the
Court nonetheless asserted that it was appropriate to consider
the “‘location and character of the entire tract of land.’”
Id. at 560-561. In light of the fact that the Court did not
actually rely upon any such factor in its opinion, this
statement must be viewed as dictum—dictum that apparently has
not been reasserted since in this Court.
Second, the dissent contends that our opinion will
“prohibit a stockbroker from working from home on his
computer, an author from writing at his home office, an
attorney from writing on billable time at home, or even a
neighborhood child from mowing his family’s and neighbors’
lawns for pay.” Post at 3. Needless to say, we have not been
presented with any of these cases, and will await their
appeals before deciding them. However, where agreements that
have been freely reached prove flawed, they can be undone or
30
modified through the same process.32 Regardless of whether
this Court can “improve upon” such agreements, we are
unprepared to do so by construing words to mean what they
plainly do not mean.
The essential issue in this case is simply this: “Is a
for-profit day-care center a ‘business?’” In our judgment, it
is. In our judgment, the parties to the contract in this case
intended that “business” would mean “business.” The approach
of the dissent would undermine the stability of property law
as well as contract law in Michigan by construing the words of
a real estate contract to mean something other than what they
clearly mean.33
32
The dissent contends that we have failed to give
sufficient consideration to the fact that “the Legislature has
concluded that family day care homes within neighborhoods are
favored . . . .” Post at 5. Even assuming that “family day
care homes” are “favored” or permitted, the dissent does not
explain the significance of this observation. Unlike the
other dissent, which makes this same observation, and
concludes as a result that the “public policy” doctrine is
implicated, the instant dissent makes no reference whatsoever
to the “public policy” doctrine.
33
If “business” does not mean “business,” we are
perplexed as to how parties to similar future contracts can
ever ensure that particular uses of property will not occur.
How can such future parties be any more clear or direct than
the parties to the present agreement? Perhaps, the dissent
would have them be required to set forth lengthy enumerations
of specific businesses to be prohibited. However, once words
are ignored by courts, greater precision by contracting
parties in the use of words can only promise a limited degree
of certainty as to how such words will be construed by these
same courts in the future.
31
V. CONCLUSION
We conclude that the operation of a “family day care
home” violates a covenant prohibiting commercial or business
uses, and that such a covenant is enforceable. Accordingly,
we reverse the decision of the Court of Appeals and remand to
the circuit court for entry of an order granting summary
disposition in favor of plaintiffs.
CORRIGAN , C.J., and TAYLOR , and YOUNG , JJ., concurred with
MARKMAN, J.
32
S T A T E O F M I C H I G A N
SUPREME COURT
JANICE TERRIEN, THOMAS HAGEN, and
JANET THOMAS,
Plaintiffs-Appellants,
v No. 115924
LAUREL ZWIT, TIM ZWIT, KEN CLARK,
and NICCI CLARK,
Defendants-Appellees.
___________________________________
KELLY, J. (dissenting).
I respectfully disagree with the majority's conclusions.
The analysis characterizing the operation of family day-care
homes as a commercial use is conclusory, providing an
unworkable standard for determining whether future uses are
residential or commercial. Additionally, the opinion all but
eviscerates the public policy doctrine long recognized in this
state's case law.
I would hold that the family day-care homes involved here
are residential in nature and do not violate restrictive
covenants prohibiting commercial and business use. I would
hold also that the covenants prohibiting the operation of
family day-care homes are contrary to public policy and,
therefore, are unenforceable.
I. RESTRICTIVE COVENANTS
In determining that a family day-care home is a
commercial or business use of real property, the majority
places great weight on compensation. It relies on a single
sentence contained in Lanski v Montealegre1 that broadly
defines commercial activity as any activity motivated by
profit.
However, as evidenced in the majority's discussion of
that case, profit was not the determinative factor in
concluding that the defendant's nursing home was a commercial
activity. Instead, the Court also considered the effect of
the home's activity on the general plan of the area, which was
originally intended as a private resort area. Id. at 49-50.
The Court used a similar approach with respect to adult
foster homes in City of Livonia v Dep't of Social Services,
423 Mich 466; 378 NW2d 402 (1985). There it held that such
homes do not violate restrictive covenants limiting land use
to residential purposes and prohibiting noxious or offensive
trade, manufacturing, secondhand merchandising, and wrecking
businesses. The mere fact that adults living there made
1
361 Mich 44; 104 NW2d 772 (1960).
2
payments for certain items and services did not transform
residential activities to commercial activities. Id. at 529.
These cases illustrate that land use should be
characterized according to how the activity involved there
affects the general plan of the area. This approach is
prevalent in cases involving residential use covenants. See,
e.g., Wood v Blancke, 304 Mich 283; 8 NW2d 67 (1943); O'Connor
v Resort Custom Bldrs, Inc, 459 Mich 335; 591 NW2d 216 (1999);
Beverly Island Ass'n v Zinger, 113 Mich App 322; 317 NW2d 611
(1982). While usual, ordinary, and incidental use of property
as a residence does not violate a residential use restriction,
unusual and extraordinary use might. The determination
focuses on the particular facts of the case. Wood, supra at
289. No logical reason has been shown why a similar approach
should not be employed in cases involving commercial and
business use restrictions.
This approach also honors the intent of the parties by
considering use restrictions in their entirety and in light of
the particular facts of the case. It produces the proper
standard for characterizing property use, not the narrow
approach of the majority, which focuses on a single
consideration.
Applying that analysis here, no showing has been made
that the operation of defendants' family day-care homes had
3
any effect on the overall residential character of their
neighborhood. Nor is there any evidence other than
compensation that supports a conclusion that the family day
care homes were commercial or business activities. It is
important to note that this case was decided on stipulated
facts. As a result, the record contains limited information
about the operation of the family day-care homes. It includes
the parties' stipulations to the deed restrictions,
defendants' operation of a family day-care home in their
private residences, and the parties' ownership of land within
the subdivision. There is no evidence regarding the
pedestrian and vehicular traffic associated with the day-care
homes or its effect on the subdivision. Thus, it is
impossible to conclude from the record that the family day
care homes do not conform to the ordinary and common meaning
of "use for residential purposes."
In light of these facts, the restrictive covenants do not
compel a ruling for plaintiffs.2 They address the residential
2
The restrictive covenants are:
1. No part of any of the premises above
described may or shall be used for other than
private residential purposes.
3. No lot shall be used except for
residential purposes.
12. No noxious or offensive activity shall be
(continued...)
4
nature of the neighborhood. To protect it, they prohibit
activity that might become an annoyance to the neighborhood.
The restriction prohibiting commercial and business
enterprises echoes the intent to prevent such activity. It
also prohibits the storing of equipment used in a commercial
or industrial enterprise, an activity that visibly changes a
neighborhood. It is this visible adverse effect on the
residential character of the neighborhood that the
restrictions seek to prevent, not a discrete activity such as
that involved here. I would conclude that the restriction
prohibiting commercial and business enterprises limits those
activities visibly affecting the residential nature of the
2
(...continued)
carried on upon any lot, nor shall anything be done
thereon which may be or may become an annoyance or
nuisance to the neighborhood.
14. No part or parcel of the above described
premises shall be used for any commercial,
industrial, or business enterprises nor the storing
of any equipment used in any commercial or
industrial enterprise.
23. If the parties hereto, or any of them, or
their heirs, assigns, or successors, as the case
may be, shall violate or attempt to violate any of
the covenants herein, it shall be lawful for any
other person or persons owning any real property
situated within the bounds of the above described
premises to prosecute any proceedings at law or in
equity against the person or persons violating or
attempting to violate any such covenant, and either
to prevent him or them from doing so, or to recover
damages arising or resulting from such violation.
5
neighborhood.
It is apparent from the interpretations of the terms
"commercial, industrial, or business enterprises" that have
been advanced by this Court that there is considerable
disagreement about their meanings. The absence of a
definition in the restrictive covenants leaves the ambiguity
unresolved and opens the terms to judicial interpretation.
See Craig v Bossenbery, 134 Mich App 543, 548; 351 NW2d 596
(1984). Restrictive covenants must be reasonably construed.
Boston-Edison Protective Ass'n v Paulist Fathers, Inc, 306
Mich 253, 257; 10 NW2d 847 (1943).3 And they are strictly
construed against the party seeking to enforce them, all
doubts regarding the restrictions being resolved in favor of
the free use of property. City of Livonia, supra at 525.
Applying these rules of construction, I cannot agree with
the majority's conclusion that the restrictive covenants
prohibit family day-care homes. The majority's absolute
prohibition of all forms of activity generating compensation
would preclude activities that normally have no visible effect
on a community, such as babysitting services and freelance
writing.
3
In Boston-Edison Protective Ass'n, this Court refused to
interpret the terms "single dwelling house" as requiring use
limited to those who are members of a single family.
6
The effect of the activity is relevant where the meaning
of the restrictive covenants and the question of breach is
uncertain. See Oosterhouse v Brummel, 343 Mich 283, 289; 72
NW2d 6 (1995). When considered in the context of the other
restrictions, it is unlikely that the majority's broad
interpretation of the covenants is what was intended.
Accordingly, the effect on the neighborhood is relevant to a
decision whether the operation of a family day-care home
violates a covenant prohibiting commercial or business use.
The majority's is an extreme construction and one that
unnecessarily constrains the use of residential property.
Therefore, I would hold that the defendants' family day
care homes do not violate the restrictive covenants
prohibiting commercial or business uses.
II. PUBLIC POLICY
Even if the operation of family day-care homes were
violative of plaintiffs' restrictive covenants, the covenants
are contrary to public policy and cannot be enforced. Public
policy was defined by this Court in Skutt v Grand Rapids4 and
Sipes v McGhee, 316 Mich 614, 623-624; 25 NW2d 638 (1947):5
"'What is the meaning of "public policy?" A
correct definition, at once concise and
4
275 Mich 258, 264-265; 266 NW 344 (1936).
5
Rev'd on other grounds in Shelley v Kraemer, 334 US 1;
68 S Ct 836; 92 L Ed 1161 (1948).
7
comprehensive, of the words "public policy," has
not yet been formulated by our courts. Indeed, the
term is as difficult to define with accuracy as the
word "fraud" or the term "public welfare." In
substance, it may be said to be the community
common sense and common conscience, extended and
applied throughout the State to matters of public
morals, public health, public safety, public
welfare, and the like. It is that general and
well-settled public opinion relating to man's
plain, palpable duty to his fellow men, having due
regard to all the circumstances of each particular
relation and situation.
"'Sometimes such public policy is declared by
Constitution; sometimes by statute; sometimes by
judicial decision. More often, however, it abides
only in the customs and conventions of the
people,--in
- their clear consciousness and
conviction of what is naturally and inherently just
and right between man and man. It regards the
primary principles of equity and justice and is
sometimes expressed under the title of social and
industrial justice, as it is conceived by our body
politic. When a course of conduct is cruel or
shocking to the average man's conception of
justice, such course of conduct must be held to be
obviously contrary to public policy, though such
policy has never been so written in the bond,
whether it be Constitution, statute or decree of
court. It has frequently been said that such
public policy is a composite of constitutional
provisions, statutes and judicial decisions, and
some courts have gone so far as to hold that it is
limited to these. The obvious fallacy of such a
conclusion is quite apparent from the most
superficial examination. When a contract is
contrary to some provision of the Constitution, we
say it is prohibited by the Constitution, not by
public policy. When a contract is contrary to
statute, we say it is prohibited by a statute, not
by public policy. When a contract is contrary to a
settled line of judicial decisions, we say it is
prohibited by the law of the land, but we do not
say it is contrary to public policy. Public policy
is the cornerstone--the
- foundation--of
- all
constitutions, statutes, and judicial decisions,
and its latitude and longitude, its height and its
8
depth, greater than any or all of them. If this be
not true, whence came the first judicial decision
on matter of public policy? There was no precedent
for it, else it would not have been the first.'"
[Skutt, supra at 264, quoting Pittsburgh, C C & St
L R Co v Kinney, 95 Ohio St 64; 115 NE 505 (1916).]
Public policy is what is just, right, reasonable, and
equitable for society as a whole. McNeal, Judicially
determined public policy: Is "the unruly horse" loose in
Michigan?, 13 TM Cooley L R 143, 149 (1996).
Contrary to the majority's conclusion, the public policy
of this state supports family day-care homes. This fact is
evidenced by the actions over time of various state entities.
The Legislature has defined family day-care homes as
residential uses in zoning statutes. See MCL 125.216g and
125.286g.6 It has seen fit to regulate family day-care homes
in the context of the child care licensing act for the
protection of children. See MCL 722.111 et seq.7
The executive branch has addressed the issue of child
care. Michigan Executive Order No. 1995-21 established an
advisory committee on day care for children. The committee
later issued recommendations intended to strengthen the child
6
Earlier cases examined zoning statutes in determining
public policy. See Craig, supra; McMillan v Iserman, 120 Mich
App 785; 327 NW2d 559 (1982). We know of no reason to discard
this approach.
7
This reliance is supported by reasoning in Craig, supra.
That case relied in part on the Adult Foster Care Facility
Licensing Act in determining public policy.
9
care system of this state. See DSS Child Care: Making It
Work, Pub No 714 (February, 1996).
Finally, the judiciary in case law has proclaimed that
Michigan public policy favors family day-care homes. For
example, in Beverly Island, supra at 330-331, the Court of
Appeals articulated that policy.
In light of these express indications, it follows that
restrictive covenants prohibiting family day-care homes are
contrary to our state's public policy and are unenforceable.8
The majority's dismissal of these strong indications of public
policy is baffling and disturbing. Its narrow approach to
determining public policy constrains the judiciary by
prohibiting it from invalidating covenants absent express
statutory mandates.
But judicial decisions are an important component of
public policy because they fill gaps occurring in
constitutions and statutes. Constitutions, which are
necessarily broad in scope, are not intended to resolve every
controversy that might arise. Statutes are narrower in scope,
providing rules governing society. But it is clear that the
8
We acknowledge that Wood supports property owners'
contractual rights to enforce restrictive covenants. However,
such restrictions cannot be enforced when they violate sound
public policy. Livonia, supra at 525; Oosterhouse, supra at
286. Thus, the contractual rights of property owners cannot
contravene public policy.
10
Legislature cannot foresee every situation likely to result in
controversy. McNeal, supra at 143-144.
When controversy arises, it is the role of the judiciary
to determine the law as it applies to the facts of the
particular case. This sometimes requires the judiciary to
make public policy determinations. Thus, if the courts are to
decide issues presented in novel factual situations not
contemplated by statute, they must necessarily have the power
to determine existing public policy. Id. at 146.
As early as 1888, this Court acknowledged the
significance of public policy. See McNamara v Gargett, 68
Mich 454; 36 NW 218 (1888). McNamara adopted a definition of
public policy that considered the morals of the time and the
established interest of society. Id. at 460. It held that a
promissory note was not enforceable, reasoning that the
interests of the individual must be subservient to public
welfare. Id. at 461-462. Public policy was also considered
by this Court in decisions as old as Fetters v Wittmer Oil &
Gas Properties,9 Brown v Union Banking Co,10 and Sellars v
11
Lamb.
9
258 Mich 310; 242 NW 301 (1932).
10
274 Mich 499; 265 NW 447 (1936).
11
303 Mich 604; 6 NW2d 911 (1942).
11
Hence, the majority's refusal to weigh, as is appropriate
here, public policy not codified in the law of the state is
sharply contrary to this Court's long established practice.
The majority fails to provide a persuasive reason for so
doing. Instead, it engrafts its own version of what the law
should be, discarding the knowledge and wisdom of those who
came before the current Court. This is the embodiment of
judge-made law.
III. CONCLUSION
The majority's reasoning contravenes established
principles of law. It unreasonably characterizes land use
employing only one criterion, whether monetary compensation is
involved, without any consideration of the restrictions as a
whole or the effect of the use on the community. This creates
an unworkable standard with far-reaching negative implications
regarding the free use of land.
Additionally, the majority turns its back on public
policy that was developed and has been applied by this Court
for decades. This too has extensive adverse implications for
the jurisprudence of the state.
The operation of family day-care homes is residential in
nature and does not violate restrictive covenants prohibiting
commercial or business use. Additionally, restrictive
covenants barring their operation are contrary to public
12
policy and, therefore, are unenforceable. I would affirm the
Court of Appeals decision.
CAVANAGH , J., concurred with KELLY , J.
13
S T A T E O F M I C H I G A N
SUPREME COURT
JANICE TERRIEN, THOMAS HAGEN and
JANET THOMAS,
Plaintiffs-Appellants,
v No. 115924
LAUREL ZWIT, TIM ZWIT, KEN CLARK,
and NICCI CLARK,
Defendants-Appellees.
_________________________________
WEAVER, J. (dissenting).
I respectfully dissent from the majority opinion. I
would hold that family day-care homes are not inherently
incompatible with the restrictive covenants in this case, and,
on the basis of the facts to which the parties have
stipulated, affirm the grant of summary disposition in favor
of defendants.
The issue in this case is whether the restrictive
covenants that are recorded for the defendants’ properties
prohibit the defendants from operating licensed family day
care homes1 at their residences
Restrictive covenants in deeds will be construed
strictly against the grantors and those claiming the right to
enforce them. All doubts will be resolved in favor of the
free use of property. James v Irvine, 141 Mich 376, 380; 104
NW 631 (1905). Deed restrictions are property rights. The
courts will protect those rights if they are of value to the
property owner asserting them and if the owner is not estopped
from seeking enforcement. Rofe v Robinson, 415 Mich 345, 349;
329 NW2d 704 (1982).
The restrictions in this case provide, in pertinent part:
1. No part of any of the premises above
described may or shall be used for other than
private residential purposes.
* * *
3. No lot shall be used except for
residential purposes.
* * *
12. No noxious or offensive activity shall be
1
MCL 722.111(f)(iii) provides:
“Family day care home” means a private home in
which 1 but fewer than 7 minor children are
received for care and supervision for periods of
less than 24 hours a day, unattended by a parent or
legal guardian, except children related to an adult
member of the family by blood, marriage, or
adoption. Family day care home includes a home that
gives care to an unrelated minor child for more
than 4 weeks during a calendar year.
2
carried on upon any lot, nor shall anything be done
thereon which may be or may become an annoyance or
nuisance to the neighborhood.
* * *
14. No part or parcel of the above described
premises shall be used for any commercial,
industrial, or business enterprises nor the storing
of any equipment used in any commercial or
industrial enterprise.
The majority narrowly focuses on restriction 14 and holds
that any activity that creates a profit is prohibited by the
restrictive covenant. I disagree with the majority’s analysis,
because it fails to consider the covenant as a whole and the
neighborhood to which it applies. See Lanski v Montealegre,
361 Mich 44; 104 NW2d 772 (1960). The majority conclusion
would prohibit a stockbroker from working from home on his
computer, an author from writing at his home office, an
attorney from writing on billable time at home, or even a
neighborhood child from mowing his family’s and the neighbors’
lawns for pay. I do not believe that this was the intent of
the parties when they entered into the covenant.2
2
The majority asserts that “where agreements that have
been freely reached prove flawed, they can be undone or
modified through the same process.” Slip op, p 30. It is
indeed the case that if all the interested parties-in this
case the entire subdivision-agree to modify or revoke the
covenant, that could be done. See 21 CJS, Covenants, § 33, pp
322-323. Nevertheless, it is not relevant to the key issue,
determining whether the defendants’ family day-care homes are
(continued...)
3
This Court should consider more than whether the activity
is designed to produce a profit. As this Court has previously
said:
[T]he rights of the parties are not to be
determined by a literal interpretation of the
restriction. It is to be construed in connection
with the surrounding circumstances, which the
parties are supposed to have had in mind at the
time they made it, the location and character of
the entire tract of land, the purpose of the
restriction, whether it was for the sole benefit of
the grantor or for the benefit of the grantee and
subsequent purchasers, and whether it was in
pursuance of a general building plan for the
development and improvement of the property.
[Brown v Hojnacki, 270 Mich 557, 560-561; 259 NW
152 (1935) (citations omitted).]
Thus, the Court should consider other factors, such as
the purpose of the restriction and the effect on the
neighborhood, in determining whether the disputed activities
violated the restrictive covenant at issue. See Lanski v
Montealegre, supra.3 In determining the effect on the
2
(...continued)
prohibited by the restrictive covenant at issue here.
3
In Lanski v Montealegre the Court considered a covenant
providing that owners “shall not use said premises for any
commercial enterprise or engage in any commercial undertaking
thereon . . . .” Id. at 46. Defendants established a
convalescent home in a building formerly used as a residence.
The Court said that the general plan for a private resort area
indicated that a broad definition of “commerce” was intended.
“In its broad sense commercial activity includes any type of
business or activity which is carried on for a profit.” Id.
(continued...)
4
neighborhood, the court should consider whether the covenant
applies only to one individual tract of land, or to an entire
neighborhood or subdivision. It is also necessary to consider
the character of the surrounding neighborhood—for example,
whether it is a private resort area, a single-family
neighborhood, a neighborhood containing one or more apartment
houses, or a mixed-use neighborhood.
Here the covenant was designed to preserve the
residential nature of the subdivision and to avoid the
disruption to the neighborhood that “commercial, industrial,
or business enterprises” would cause. Family day-care homes,
absent some special feature such as signs or intrusive
lighting, do not cause such a disruption. Family day-care
homes are limited to seven or fewer children, which limits the
effect on neighborhoods. MCL 722.111(f)(iii). Their
essential characteristics are compatible with a residential
neighborhood, and they do not necessarily have any more effect
on a neighborhood than any large family. Further, the
Legislature has concluded that family day-care homes within
neighborhoods are favored, as evidenced by the county zoning
3
(...continued)
at 49. Nevertheless, the Court went on to examine the effect
of the home on the neighborhood: “The patients, the visitors,
the nurses, and the over-all atmosphere detract from the
general plan of the private, noncommercial resort area
originally intended.” Id. at 49-50.
5
act and the township zoning act.4 The majority fails to give
this point sufficient consideration.
I conclude that operating a family day-care home does not
inherently affect the residential character of the
neighborhood that the covenant was designed to protect. This
case was submitted on stipulated facts, and there is no
indication of signs, lights, or other effects on the
4
In both zoning acts, it is specified that family day
care homes shall be considered a residential use of property,
and a permitted use in all residential zones.
MCL 125.216g(2) of the county zoning act provides:
A family day-care home licensed or registered
under Act No. 116 of the Public Acts of 1973, being
sections 722.111 to 722.128 of the Michigan
Compiled Laws, shall be considered a residential
use of property for the purposes of zoning and a
permitted use in all residential zones, including
those zoned for single family dwellings, and shall
not be subject to a special use or conditional use
permit or procedure different from those required
for other dwellings of similar density in the same
zone.
MCL 125.286g(2) of the township zoning act provides:
A family day-care home licensed or registered
under Act No. 116 of the Public Acts of 1973, being
sections 722.111 to 722.128 of the Michigan
Compiled Laws, shall be considered a residential
use of property for the purposes of zoning and a
permitted use in all residential zones, including
those zoned for single family dwellings, and shall
not be subject to a special use or conditional use
permit or procedure different from those required
for other dwellings of similar density in the same
zone.
6
neighborhood that would cause the family day-care homes to be
in violation of the restrictive covenant. Accordingly, I
would affirm the grant of summary disposition in favor of the
defendants.
7