Case Title: JANICE TERRIEN V LAUREL ZWIT

Citation: 

Docket Number: 115924

State: michigan

Court: Michigan Supreme Court

Date: 2002-07-25T00:00:00Z

Document:
____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
                                          
 
 
Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
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  
___________________________________ 
v 
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,  
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  
1361 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  
2The 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.  
3In 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  
4275 Mich 258, 264-265; 266 NW 344 (1936).  
5Rev'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  
6Earlier 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.  
7This 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  
8We 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. 
9258 Mich 310; 242 NW 301 (1932).  
10274 Mich 499; 265 NW 447 (1936).  
11303 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  
1MCL 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  
2The 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.  
3In 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  
4In 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