____________________________________________________________________________________________ 

____________________________________________________________________________________________________________________________ 

 

Michigan Supreme Court 

Lansing, Michigan 48909 

C hief Justice Justices 

Maura D. Corrigan	 Michael F. Cavanagh 

Elizabeth A. Weaver 

Marilyn Kelly 

Clifford W. Taylor Opinion 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 40:55D66.5b(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 welltended. 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 daycare 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 daycare 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 daycare 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
 

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
 

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 daycare 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