Terrien v. Zwit

Court: Michigan Supreme Court
Date filed: 2002-07-25
Citations: 648 N.W.2d 602, 467 Mich. 56, 648 N.W.2d 602, 467 Mich. 56, 648 N.W.2d 602, 467 Mich. 56
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132 Citing Cases

                                                                       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



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