Reynolds Ex Rel. Cannon v. Reynolds

182 S.E. 341, 208 N.C. 578, 1935 N.C. LEXIS 84

• Court: Supreme Court of North Carolina
• Decided: November 1, 1935
• Status: Published

Opinion

ClarksoN, J.

Tbis controversy bas heretofore been before tbis Court: In re matter of the Guardianship of Arme Gannon Reynolds II, 206 N. 0., 276.

We think it unnecessary to discuss tbe question as to Anne Cannon Reynolds' (now Smith) right to be heard on this record, except as an amicus curce. She is now of age and the mother and natural guardian of Anne Cannon Reynolds II. In this Court, through her counsel, Anne Cannon Reynolds (Smith) says that she approves the position taken by the Safe Deposit and Trust Company of Baltimore, trustee, and Annie L. Cannon, one of the guardians of Anne Cannon Reynolds II, but later in her briefs says : “The individual rights of this appellant acquired under and by virtue of the judgment of 4 August, 1931, have not been materially changed by the judgment of the court below, and, therefore, she asks nothing in her individual right. However, as natural guardian of her child, Anne Cannon Reynolds II, she desires that this Court be fully informed as to her position taken. This appellant has always expressed a desire that the matters in controversy in this cause be settled, as will appear from the judgment of 4 August, 1931, and her affidavit in the Cabarrus proceedings: ‘Owing to the many family questions which were under consideration in reaching the family agreement approved by the court, and in view of the litigation now pending in Maryland involving many other family questions affecting not only the fortunes but the good name of affiant, her child, and the infant’s family on both sides.’ She believes that the only rights to be considered in this cause are those of her child and Christopher Smith Reynolds, and that they alone are entitled to the trust funds in controversy, and she is further of the opinion that these differences can now be settled without the interference of those who are asserting claims based on bare or very remote probabilities.” That she took no part until order was issued to her, on 16 November, 1934, by the court. That the question of the validity of her divorce was not raised by her, but questioned (1) by the Reynolds heirs (Richard J. Reynolds, Mary Reynolds Babcock, and Nancy Reynolds Bagley), (2) Cabarrus Bank and Trust Company, co-guardian, in its response to the interplea of Christopher Smith Reynolds (by his next friend, R. C. Yaughn), (3) Safe Deposit and Trust Com pany of Baltimore, trustee, when it answered the offer of settlement of the Reynolds heirs. Further: “This appellant does not desire to have the validity of her divorce questioned in the courts of this State, and respectfully requests this honorable court not to direct that the same be done. The Reynolds heirs, Christopher Smith Reynolds, and Cabar-rus Bank and Trust Company, coguardian of Anne Cannon Reynolds II, have each claimed the entire trust estates to which Zachary Smith Reynolds was entitled, but this appellant places her child in the custody of this court and requests only that to which she is entitled. In order that the matters and things in controversy in this action might be finally determined, this appellant respectfully requests this court to fully protect the rights of her infant child, Anne Cannon Reynolds II, and to declare in its opinion just what property interests the respective parties are entitled to, and direct that judgment be entered accordingly, giving to each what the law and equity directs, no more and no less.”

It would appear from the above that in the final analysis the mother and natural guardian put her child in the “lap of the Chancellor.”

It is well settled that ordinarily the admission of attorneys bind their clients. “Admission of attorneys bind their clients in all matters relating to the progress and trial of the cause, and are in general conclusive.” 1 Greenleaf on Evidence, 186; Lumber Co. v. Lumber Co., 137 N. C., 431 (438); Bank v. Penland, 206 N. C., 323 (324).

On 16 November, 1929, Zachary Smith Reynolds was married to Anne Cannon. Both were minors, but of legal age to marry. On 23 August, 1930, Anne Cannon Reynolds II was born of the union. In a short period of time after the marriage the parties to said marriage separated. Anne Cannon Reynolds II, the infant, was left with her mother. On 4 August, 1931, an action was instituted in the Superior Court of Eorsyth County by Anne Cannon Reynolds (now Smith). This action seems to have been started under O. S., 1667, which gave the wife a legal right to make her husband provide for her and her child necessary subsistence, according to his means and condition in life; but it became elastic and reached out and deprived the infant, Anne Cannon Reynolds II, of her rights in the estate of her grandparents. The trusts set up under the agreement for Anne Cannon Reynolds II, the infant, was $500,000. Her portion is now estimated, under the facts of this record, to be worth some $12,000,000 or more. It provided for Anne Cannon Reynolds (now Smith) $500,000, which she in her brief says is not materially changed by the present decree, and she asks nothing in her individual right. The decree uses this language: “That the minor plaintiffs, Anne Cannon Reynolds and Anne Cannon Reynolds II, upon the execution and delivery of said contract and trust agreement and the setting up of the trust estates therein provided, be and they are hereby declared for ever estopped and barred from making other or further claims for financial support, aid, or maintenance from the said Zachary Smith Reynolds, or any estate owned or left by him, whether the same be held in trust or otherwise, and from making further claim to the whole or any part of the trust estates created by the will of R. J. Reynolds or Katherine S. Johnston, distribution of said trust estates at the time fixed for distribution as provided in said wills, to be made to the persons entitled thereto as if Zachary Smith Reynolds and Anne Gannon Reynolds had never been married and Anne Garmon Reynolds II had never been born.” The Safe Deposit and Trust Company of Baltimore, trustee, sets up these trust estates under the decree.

On 23 November, 1931, Anne Cannon Reynolds obtained a divorce from her husband, Zachary Smith ■ Reynolds, in the Second Judicial District Court of the State of Nevada, and in and for the county of "Washoe. On 29 November, 1931, Zachary Smith Reynolds was married to Elizabeth Holman, in Monroe, Michigan, and they resided together until his death on 6 July, 1932 — under the age of 21 years. On 10 January, 1933, Christopher Smith Reynolds was born of said union. Thus, at his death, Zachary Smith Reynolds left two children — Anne Cannon Reynolds II and Christopher Smith Reynolds, in ventre sa mere. Under the laws of both the State of New York and the State of North Carolina, a will executed by a parent prior to the birth of a child is inoperative as to said child. The purported will in controversy was executed prior to the marriage of Zachary Smith Reynolds and Elizabeth Holman and prior to the birth of Christopher Smith Reynolds.

Before the Cabarrus County clerk, on 8 September, 1931, on petition of the father of Anne Cannon Reynolds, the Cabarrus Bank and Trust Company and Annie L. Cannon, on 5 November, 1931, were appointed guardians of the estate of Anne Cannon Reynolds II, alleging that she was entitled to the income from $500,000, the amount set up in the before mentioned decree.

On 24 March, 1933, the Safe Deposit and Trust Company of Baltimore, trustee, under the wills and deeds of the grandparents of Anne Cannon Reynolds II, filed a bill of complaint in the Circuit Court of Baltimore City, setting out in full the complete story of the tangled web, and raised certain questions of law and fact for determination. Conferences were held, letters exchanged between the attorneys for the guardians of Anne Cannon Reynolds II, in reference to a joint attack on the decree of 4 August, 1931, but of no avail. On 1 April, 1933, the Cabar-rus Bank and Trust Company, one of the guardians of Anne Cannon Reynolds II, finally filed in the Superior Court of Cabarrus County a petition setting forth the facts and praying for advice and instructions of the court in reference to filing a motion in the original cause in Forsyth. County, “for the purpose of attacking the validity of said judgment, in so far as it purported to affect the interests of its ward in said trust shares.”

The said Annie L. Cannon, coguardian of Anne Cannon Reynolds II, filed an answer in which she asserted the validity of t'he original judgment, and purported to set forth the facts which she contended showed such validity. In her answer, the said Annie L. Cannon, coguardian aforesaid, set out in full her reasons for not attacking the validity of the. judgment originally entered therein, and urged the acceptance of a new and “tentative proposition” of Richard J. Reynolds, Mary Reynolds Babcock, and Nancy Reynolds Bagley, hereafter called the Reynolds heirs. The “tentative proposition” increased the $500,000 given in the Forsyth County judgment and decree $1,500,000 — making a total of $2,000,000. This “tentative agreement” was approved by the court. On appeal to this Court, in the main opinion In re Reynolds, supra, it is said (at p. 293) : “The petition of the Cabarrus Bank and Trust Company, guardian of Anne Cannon Reynolds II, should have been granted.” That (pp. 278-9) : “After reading and considering said petition and response thereto, and the affidavits appearing in the record, and the various exhibits appearing in the record, and after hearing argument of counsel, the Court, upon the undisputed facts, finds that the petitioner has shown reasonable, adequate, sufficient, and probable cause for filing a motion in the Superior Court of Forsyth County, in the action above entitled, praying that the decree in said action be set aside upon the following grounds,” (p. 280) “it is the duty of the guardians to file the proper and appropriate motion in the said action in Forsyth County for the purpose of having the decree entered therein set aside in so far as it affects the rights of the said Anne Cannon Reynolds II, the merits of said motion to be finally passed upon and determined upon the hearing thereof in the Superior Court of Forsyth County. The Court further holds that the guardians should immediately take the necessary steps to protect the interests of their ward in the Maryland action referred to in the petition. The Court further holds that the alleged new proposal, purporting to be submitted for or on behalf of the relatives of Zachary Smith Reynolds, involving the establishment of a foundation to the memory of Zachary Smith Reynolds is not before the Court. That the persons for or on behalf of whom said proposal is submitted are not parties properly before this Court upon the hearing of the petition in this matter ; that, consequently, in any event, this Court could not properly consider such alleged proposal upon the hearing of the petition herein; that, if any new proposal is to be made, it should be addressed to the Superior Court of Forsyth County, in the action to which all persons in interest are parties.” Adams, J., concurs in the result. Stacy, C. J., concur ring, said (pp. 294-5) : “The ruling was evidently based upon the assumption that the Forsyth decree is valid, otherwise the amount probably surrendered is disproportionate to the amount tentatively offered. But the validity of the Forsyth decree was not before the Court for determination. The question was whether sufficient showing had been made to warrant the instruction that the validity of this decree should be challenged. Apparently the showing was such as to justify the court in ■informing itself upon the validity of this decree before finally foreclosing the rights of the infant ward in the respect suggested. Nevertheless, it is said the practical certainty of a million and a half under the circumstances disclosed by the record is better for the infant than the uncertainty of the quest for twelve millions. The matter was not presently before the court with sufficient knowledge and in such shape as to call for the exercise of its discretion on the acceptance or rejection of this tentative proposition. The two guardians are the only parties to this proceeding, and they alone in their representative capacity would be bound by the judgment. No ward can complain if his guardian in good faith and in the exercise of his best judgment pursues the mandate of the law and loses a tentative offer of settlement such as here disclosed, but he might question a departure from established rules of procedure.”

Justice Brogden, concurring in result, said (pp. 296-7) : “Hence, the sole question before the chancellor was whether the minor, Anne Cannon Beynolds II, had the right to proceed to Forsyth County and lodge a motion to set aside a judgment which shut the door of the law in her face so far as asserting any further right in and to the property specified. There were no parties before the court except the guardians. The petition alleged grave irregularities and fatal defects in the Forsyth judgment. These allegations were denied and evidence offered in support of such denial. The New York will was not upon the lap of the chancellor. The family settlement and the laudable intentions of the family were not upon the lap of the chancellor. The actual validity of the Forsyth judgment was not upon the lap of the chancellor. The ultimate question was whether the minor had alleged and shown the existence of such facts, or probable facts, as to entitle her to be heard by the law of her country in a proceeding in Forsyth County to unloose the bar of that judgment. The guardians held in good faith opposite opinions as to the wisest course to pursue. Notwithstanding, it must be borne in mind that Anne Cannon Beynolds II is the heroine of the play and the clashing judgment of the guardians is incidental and secondary. The trial judge found that it was not for the best interest of the minor to be allowed to be heard in Forsyth County. Both the history and traditions of equity as held and applied in this State demonstrate that it always lends an attentive ear to the call of widows, orphans, and minors, and in determining the bare right to be heard upon the merits of a proposition, it has not required the highest and most technical degree of proof. I am of the opinion that the facts disclosed in the record are sufficient to entitle Anne Cannon Eeynolds II to a chance to be heard in the courts in a proper proceeding in Forsyth County. Of course, even a minor ought not to be heard in an assault upon a final judgment for inconsequential or captious reasons. Neither should the right to be heard upon the merits be denied because the evidence produced is not ‘horse high, bull strong, and pig tight.’ Therefore, I am of the opinion that the trial judge erred in denying to the minor the right to be heard upon the merits of the controversy. The Forsyth decree may have been eminently proper and advantageous not only at the time it was rendered, but even now. The proposed family settlement may be eminently wise and proper. That, however, is not the point. The right of the minor to question the proceeding in Forsyth in the due and orderly manner prescribed by law, is the point as I conceive it, and that right has been improvidently denied by the judgment rendered.”

In accordance with the decision of this Court, the court below in its judgment found: “(1) That, in this action as originally constituted, the Cabarrus Bank and Trust Company, one of the duly appointed guardians of Anne Cannon Eeynolds II, filed a motion on 30 April, 1934, to set aside the original judgment entered herein on 4 August, 1931, in so far as said judgment attempted to affect the rights of the said Anne Cannon Eeynolds II in the trust estates, created by her paternal grandparents, hereinafter referred to. (2) Upon the filing of said motion, an order was duly entered herein making Annie L. Cannon, coguardian of the said Anne Cannon Eeynolds II, a party defendant herein, and ordering her to show cause why the said motion should not be allowed; the said order also commanding the original defendants herein to file an answer which they, or any of them, might have to said motion within twenty days from the service of said order; and that said order, together with a copy of said motion, was duly served upon the original defendants herein and upon the said Annie L. Cannon, one of the guardians of Anne Cannon Eeynolds II.”

Schenck, J., in Power Co. v. Yount, ante, 182 (184), speaking to the subject of the law of the case, says: “The order consolidating the summary proceeding with the action instituted in behalf of other creditors, since it was made in conformity with the former opinion in this case, is binding upon the appellant, and pretermits, if it does not preclude, any discussion of objections and exceptions thereto. ‘A decision by the Supreme Court on a prior appeal constitutes the law of the case, both in subsequent proceedings in the trial court and on a subsequent appeal.’ Newbern v. Telegraph Co., 196 N. C., 14; Nobles v. Davenport, 185 N. C., 162.” Betts v. Jones, ante, 410 (411).

Tbe record discloses that tbe court below found that all parties in interest, whether in esse or in posse, present and prospective, were made parties and before tbe court. Those of age and minors representing every vested or contingent interest and every class — the State of North Carolina, claiming its inheritance or succession taxes. All were made parties and by interplea became parties and filed fully their contentions. This case was tried in the court below, as this Court, when it was here, in its opinion said it should be tried. The court below had full power and authority to hear and determine the contentions. In fact, the attorney for Annie L. Cannon, coguardian of Anne Cannon Reynolds II, of long experience and learned in the law, wrote a letter on 5 June, 1931, which is in the record: “Touching the question of the jiower of a court of equity to ratify and approve a contract affecting the interests of an infant in trust funds, etc., when made by properly constituted guardians, and upon suitable findings of fact, I beg to call your attention to the case of Bank v. Alexander, 188 N. C., 611-2. The discussion under paragraph three of the opinion involves precisely the principle which we are considering. This seems to be the only immediate decision in our courts upon the precise question of the affirmation of a contract such as we are considering, although a fuller investigation than I have had time to make may disclose some other case. The question of the power of a court to authorize a compromise in infants’ rights in controversies over real estates or property is rather exhaustively considered in 33 A. L. R., 105, et seq., under an annotation dealing alone with this subject. You will observe that the Supreme Court of the United States, as well as a number of states, unqualifiedly asserts the power of a court of chancery to deal conclusively in such matters and, by proper decree, to place the subject beyond any possible future attack.” The law of this jurisdiction is well stated in this letter.

In the main opinion in In re Reynolds, supra, at p. 291, we find: “Courts of equity look with a jealous eye on contracts that affect materially the rights of infants.” Justice Brogden, in his concurring opinion, as quoted above, says, at p. 296: “Both the history and traditions of equity, as held and applied in this State, demonstrate that it always lends an attentive ear to the call of widows, orphans, and minors, and in determining the bare right to be heard upon the merits of a proposition, it has not required the highest and most technical degree of proof.” The best interest of the infants is the star (such as the wise men saw in the East and followed), which we must follow to guide us in determining this tangled controversy, so as to do justice to all and bring peace to a distressing family situation.

Tbe facts more fully concerning all the aspects:

The will of E. J. Eeynolds established a trust, providing for a certain share therein, of which his son, Zachary Smith Eeynolds, was to be the first beneficiary. The provisions pertinent to the present case are as follows:

(a) Upon reaching the age of twenty-eight years, the said Zachary Smith Eeynolds was to receive the corpus of said share, together with the accumulated income thereon.

(b) Before reaching the age of twenty-eight years, if the said Zachary Smith Eeynolds died leaving a will, the trust continued for the benefit of his devisees until the time when the said Smith would have arrived at the age of twenty-eight years (4 November, 1939), whereupon the corpus of said trust share was to be turned over to said devisees.

(c) Before reaching the age of twenty-eight years, if Zachary Smith Eeynolds died intestate, leaving issue, the trust was continued for the benefit of his children living at his death, until the time when he would have arrived at the age of twenty-eight years, whereupon the trust should cease and the said trust share should become vested in his children then surviving.

(d) Before reaching the age of twenty-eight years, if Zachary Smith Eeynolds died intestate “without issue living at the termination of said trust,” his share was to be held “on like trusts” for the surviving children of the testator (E. J. Eeynolds) and the then living issue of the testator’s deceased children per stirpes.

(e) If all the testator’s children and their issue died before the termination of the trusts, one-half of the trust estate was to go to the testator’s wife, Katherine S. Eeynolds (Johnston), and the other half to the testator’s brothers and sisters then'living, and the descendants then living of any deceased brothers and sisters, per stirpes.

The will of Katherine S. Johnston also established a trust providing for a certain share therein of which her son, Zachary Smith Eeynolds, was to be the first beneficiary. The provisions pertinent thereto are as follows:

(a) The trust continued during the life of said Zachary Smith Eeynolds.

(b) Upon his death, the corpus of the trust share went to his devisees, by will; and, “in default of such appointment” to his descendants “living at his death,” with an immaterial proviso as to a limited continuance of the trust with respect to ' Class A common stock of E. J. Eeynolds Tobacco Company.

(c) In default of appointment by Zachary Smith Eeynolds, and in default of any descendants of his, the share in question was to be divided among “such of my husband, children, and descendants as are then liv ing, per stirpes and not per capitatbe husband taking a child’s part, the share of such children as were then living to be held by the trustee for them upon the same trusts that the original shares of the estate of the testatrix were then held.

During her lifetime the said Katherine S. Johnston, by deed, also established a comparatively small trust creating a share, of which the said Zachary Smith Reynolds was the first beneficiary upon the same terms as those outlined in her will.

The Safe Deposit and Trust Company of Baltimore was appointed trustee in each one of the three trust instruments above described.

On 29 July, 1918, R. J. Reynolds died in Forsyth County. His will was properly probated. His estate was settled, and the residue thereof was turned over to the trustee, who has ever since acted in said capacity. The trustee holds separately the securities and personal property which constitute the share of which Zachary Smith Reynolds was the first beneficiary.

On 29 December, 1923, Katherine S. Johnston (formerly the widow of R. J. Reynolds) executed and delivered to said trustee a certain deed whereby she transferred and delivered to said trustee certain shares of stock in the R. J. Reynolds Tobacco Company to be held in trust for her four children, the share of Zachary Smith Reynolds was to be held in a trust similar to that outlined in her will above referred to.

On 24 May, 1924, Katherine S. Johnston died. Her will was probated, her estate was settled, and the trustee now holds separately the property, consisting of bonds, stocks, and securities, constituting the share of which Zachary Smith Reynolds was the first beneficiary, including the share of the individual estate, of Katherine S. Johnston and the share of the property disposed of by her in the exercise of her power of appointment.

The judgment in the court below modifies the original judgment entered on 4 August, 1931. In so doing, it approves a complete settlement of all beneficial interests in the trust shares hereafter mentioned, and also approves a settlement of a claim of the State of North Carolina for inheritance taxes thereon.

In re Reynolds, supra, contains the decision of the Court upon a former appeal. Pursuant to that decision, the Cabarrus Bank and Trust Company, one of the guardians of Anne Cannon Reynolds II, duly filed its motion to set aside the original judgment herein, in so far as it purported to affect the rights of its ward.

(a) The filing of this motion led to negotiations for a submission to the Court of a proposal for a final settlement of all questions in reference to a distribution of the trust shares involved.

(b) These questions bad already been raised by a suit instituted in Maryland, on 24 March, 1933, by the Safe Deposit and Trust Company of Baltimore, the trustee under each of the three trusts involved. This suit is still pending. In it the Maryland court is requested to assume jurisdiction of the said trusts, and to settle all questions in reference to the distribution of the shares in question.

(c) The proposed settlement is as follows:

(1) Two million dollars to the State of North Carolina in full settlement of all its claims for inheritance taxes.

(2) The trust fund of $500,000 heretofore established for the benefit of Anne Cannon Eeynolds I by the original judgment herein to remain intact, with certain modifications as to its disposition after the death of the said Anne Cannon Eeynolds I. The amount of this trust fund is to be treated as a credit of $500,000 upon the 37% per cent allotted to Anne Cannon Eeynolds II, provided for in subsection 4 hereof.

(3) 25 per cent of the net trust shares to Christopher Smith Eeynolds.

(4) 37% per cent of the net trust shares to Anne Cannon Eeynolds II.

(5) 37% per cent of the net trust shares to Eichard J. Eeynolds, Mary Eeynolds Babcock, and Nancy Eeynolds Bagley. In addition, there is to be paid to the Eeynolds heirs the total sum of $750,000, which they intend to give to Elizabeth Holman Eeynolds. The Eeynolds heirs have formally expressed the intention of giving to a charitable foundation in North Carolina the entire 37% per cent of the said trust shares allotted to them in the settlement.

The trusts in question were established by the will of E. J. Eeynolds and the will and a deed of Katherine Smith Johnston. In this case, we are concerned only with that share in each of the three trusts of which Zachary Smith Eeynolds was the first beneficiary.

Since the death of the trustors, and since the establishment of said trusts, several vital events have occurred which have given rise to questions of unusual difficulty in reference to a final distribution of the trust shares of which Zachary Smith Eeynolds was the first beneficiary. Some of the more important of said questions are as follows:

(1) The validity of the original judgment herein of Jj August, 1931: If this original judgment herein were held to be valid, it would entirely eliminate the infant, Anne Cannon Eeynolds II, from participation in said trust shares. In such event, these shares would go either to Christopher Smith Eeynolds or to the Eeynolds heirs, depending upon the result of other contingencies hereinafter stated. If, on the other hand, this original judgment were held to be void, Anne Cannon Eeynolds II would get the entire trust shares, or one-half thereof, or none of them, depending upon the result of other contingencies hereinafter stated, and depending also, as to the shares in the E. J. Eeynolds trusts, upon whether she was living on 4 November, 1939.

(2) Validity of the Heno divorce: If this divorce were Held to be invalid, it would effect the rights of Christopher Smith Reynolds, and the distribution of the said trust shares would likewise be affected. In that event, the said shares might go entirely to Anne Cannon Reynolds II, or might go entirely to the Reynolds heirs, depending upon subsequent contingencies and the answers to other questions herein outlined.

(3) Validity of alleged New Yorlc will: The question as to the validity of this will involves a number of subsidiary questions, such as the capacity of a minor to change his domicile; the question as to whether Zachary Smith Reynolds really did change his domicile, even if he had the capacity to do so; and the further question as to whether, in any event, under a proper construction of the trust instruments, the appointive powers therein contained could be exercised by Zachary Smith Reynolds before he became twenty-one years of age. There might also be a question as to the law of what state would determine some of these questions. If the alleged will were held to be valid, the Reynolds heirs might take the entire trust shares, to the exclusion of the two children of Zachary Smith Reynolds. On the other hand, if the alleged will were declared invalid, the ultimate distribution of said trust shares would depend upon the other uncertainties herein outlined.

(4) Death of either, or both, of the infants before -4 November, 1939: It will be noted from subsection 1 of Item 4 of the will of R. J. Reynolds that if Zachary Smith Reynolds died intestate before reaching the age of twenty-eight years the trust share in question was continued for the benefit of his children living at his death until the time Zachary Smith Reynolds would have arrived at the age of twenty-eight years (4 November, 1939), when the trust would then cease and the said trust shares would then become vested in his children then surviving. In other words, there were two points of time:

(a) Death of Zachary Smith Reynolds- — as to'income.

(b) 4 November, 1939 — as to vesting of the corpus and accumulated income.

Hence, in the absence of any settlement, if either child died before 4 November, 1939, it, and its representatives, would lose all interest in the R. J. Reynolds trust — both income and corpus. In this respect the Reynolds trust differs from the Johnston trusts, the shares of which would be distributed immediately upon the death of Zachary Smith Reynolds.

The pleadings and the evidence before the court when the present judgment was signed were entirely different from those before the court when the original judgment herein was entered.

(1) At the time the original judgment was entered herein, the pleadings contained no allegations upon which it could be based, in so far as it attempted to affect the future rights of Anne Cannon Eeynolds II in said trust shares. As Stated in the opinion on the former appeal: “The complaint in said action sets out no controversy as to the property rights of the infant, Anne Cannon Eeynolds II. There is no allegation as to any dispute in reference to the infant’s contingent interests in said trust. No reason is alleged for seeking to alter or modify the terms of said trusts, in so far as the infant, Anne Cannon Eeynolds II, is concerned. No necessity is set forth for seeking to eliminate or change her interests in said trust.”

The pleadings have been enlarged to embrace all the controversies connected with the distribution of said trust shares; and all parties having any present, future, or contingent interests therein have been made parties to the action.

(2) The existence of tona fide controversies: At the time of the entry of the original judgment Zachary Smith Eeynolds was living. Hence, there was not and could not then be any controversy in reference to the distribution of the said trust shares. Likewise, no question had then arisen as to the present or future rights of Anne Cannon Eeynolds II in said trust shares. So far as she was concerned, there was nothing before the Court to form the basis of any settlement affecting her rights in said trust shares. Under these circumstances, the original judgment seems to have been entered hurriedly — without adequate investigation and consideration.

Now, the situation has completely changed. We not only have the precipitating fact of Zachary Smith Eeynolds’ death, but we also have the existence of a number of vital questions forming the subject of bona fide controversies between the parties. These controversies relate to the validity of the original judgment herein, the validity of the Eeno divorce, and its effect on Christopher Smith Eeynolds, the validity of the New York will, and other subjects. None of these questions had arisen at the time of the original judgment. Each one of them vitally affects the distribution of the said trust shares.

The existence of these vital bona fide controversies furnishes a real basis and a compelling reason for a family settlement or compromise.

E. J. Eeynolds left four children by his wife, Katherine S. Eeynolds. After his death his widow (who is now dead) married J. Edward Johnston, and by that marriage she left a son, J. Edward Johnston, Jr. The wills of E. J. Eeynolds and Katherine S. Eeynolds (Johnston) and her deed in reference to the property rights of their four children are practically the same. These children were Eichard J. Eeynolds, Mary Eeyn-olds Babcock, Nancy Eeynolds Bagley, and Zachary Smith Eeynolds. Eichard J. Eeynolds has reached the age of 28 years, and, under the wills and deed, his interest has become vested.

On 30 April, 1934, as before set forth, in accordance with the opinion of this Court, the Cabarrus Bank and Trust Company, one of the guardians of Anne Cannon Reynolds II, filed a motion in the Superior Court of Forsyth County “to set aside the alleged judgment entered herein on 4 August, 1931, in so far as it attempts to affect the rights of said Anne Cannon Reynolds II in the trust estates created by her paternal grandparents, hereinafter more fully described, and in support of said motion, respectfully shows to the court as follows,” etc.

On 21 May, 1934, the Safe Deposit and Trust Company of Baltimore, trustee, filed an answer.

On 21 May, 1934, Annie L. Cannon, coguardian for Anne Cannon Reynolds II, filed an answer.

On 24 October, 1934, certain other defendants filed an answer. On 12 November, 1934, the State, which was allowed to interplead, filed an answer. On 15 November, 1934, an interplea of Christopher Smith Reynolds, infant, by his next friend, R. C. Yaughn, was filed.

On 16 November, 1934, Richard J. Reynolds, Mary Reynolds Babcock, and Nancy Reynolds Bagley, the only brother and sisters of Zachary Smith Reynolds (deceased), filed an offer of settlement and petition thereon. Responses were duly filed, all of which and more appear in the judgment in this cause.

Serious and grave questions of law and facts were raised. The judgment sets them out and we refer to same, all troublesome, but we will consider one for example: The validity and effect of the alleged will executed in New York by Zachary Smith Reynolds, as a basis of the offer of the brother and sisters of Zachary Smith Reynolds.

Section 49 of the judgment is as follows: “That prior to his death, to wit: On or about 21 August, 1931, the said Zachary Smith Reynolds executed an instrument in the form of a will complying with the law of the State of New York as to' the execution of wills by residents of that State, and also complying with the requirements of C. S., 4131, as to the formalities for the execution of a will under the laws of the State of North Carolina, stating therein that he was a resident of Port Washington, Nassau County, in the State of New York; that in said paper the said Zachary Smith Reynolds undertook to execute the powers of appointment conferred upon him by the will of his father, R. J. Reynolds, and by the will and deed of his mother, Katherine S. Johnston, in favor of his brother, Richard J. Reynolds (Jr.), and his two sisters, Mary Reynolds Babcock and Nancy Reynolds Bagley, to the practical exclusion of all other persons, including his then living child, Anne Cannon Reynolds II, and his then wife, Anne Cannon Reynolds I, which said will referred to and ratified the judgment in this cause under date of 4 August, 1931, and made no further provision for Anne Cannon Eeynolds II and Anne Cannon Eeynolds I, other than a bequest of $50,000. to each of them.” This matter was discussed in the opinion In re Reynolds, supra (206 N. C., at pp. 290-1).

The New York statutes are as follows: Cahill’s Consolidated Laws of New York (1930), ch. 13, sec. 10: “All persons, except idiots, persons of unsound mind, and infants, may devise their real estate, by a last will and testament, duly executed, according to the provisions of this article.” Section 15: “Every person of the age of eighteen years or upwards, of sound mind and memory, and no others, may give and bequeath his or her personal estate, by will in writing.”

Item I of E. J. Eeynolds’ will (a like provision is in the will of Katherine S. Johnston) in part is as follows: “Should any of my children die before he or she shall arrive at the age of twenty-eight (28) years, then the share of my estate which would have been payable to him or her, had he or she arrived at that age, shall be continued to be held by my said trustee for the use and benefit of his or her devisees by will until the time that such child would have arrived at the age of twenty-eight years, if he or she had lived, when the said trust shall cease and the estate shall then become payable to such devisees. . . . And, should any of my said children die without having made a testamentary disposition of his or her share of my said estate and without issue living at the termination of said trust, then his or her share shall be held on like trusts for my surviving children and the then living issue of my deceased children, per stirpes, and, should all of my said children and their issue die before the termination of the trusts, then, in that event, one-half of the trust estate in value at that time, principal and income, shall go to and belong to my said wife, and the other half to my brothers and sisters then living and the descendants then living of any of my deceased brothers and sisters, per stirpes.”

Zachary Smith Eeynolds attempted to execute a will leaving his property to his brother and sisters, as before stated. The brother and sisters make the offer of settlement. W. N. Eeynolds, the uncle of Eichard J. Eeynolds, Mary Eeynolds Babcock, Nancy Eeynolds Bagley, and Zachary Smith Eeynolds, and the great uncle of the two infants, Anne Cannon Eeynolds II and Christopher Smith Eeynolds, and all others who have contingent interests, in their answer say: “They adopt and approve the proposals of settlement heretofore made and filed in this cause by the defendants Eichard J. Eeynolds, Mary Eeynolds Babcock, and Nancy Eeynolds Bagley.” When Zachary Smith Eeynolds made the will in New York, he was over eighteen years of age. The father and mother of Zachary Smith Eeynolds, under their wills and deed, gave him the right to will the property. This compromise judgment is not making a new will for E. J. Eeynolds, but adjusting the differences brought about by his son, Zachary Smith Reynolds, attempting to do what under the wills and deed he had a right to do. Of course it had to be done legally. In the judgment is the following: “Sec. 60 (III). That the determination and settlement of the rights of all parties, particularly including Anne Cannon Reynolds II and Christopher Smith Reynolds, as herein decreed is just, fair, and equitable; that it is for the best interests of all parties, and of all the present, prospective, or contingent beneficiaries of the three trusts hereinbefore mentioned; that such determination and settlement will substantially comply with the terms and conditions of the instruments creating said trusts, considering the changed situation and condition of said parties in relation to each other, and the contingencies and uncertainties as to which of said beneficiaries would be entitled to receive said trust estates, and in what proportion; that it will, to a large extent, prevent a dissipation and waste of a large part of the said trusts, and that it will accomplish the objects and effectuate the intention of the creators of said trusts.”

We think, from the facts and circumstances of this case, that the above is correct — that the determination and settlement is “just, fair, and equitable.”

In the present case new facts are set forth, the pleadings are enlarged to bring in all parties .that have the remotest interest and sufficient allegations to cover every conceivable controversy, and the differences are vital and bona fide controversies. Paragraph 25 of the judgment, is as follows: “That the parties to this proceeding are all properly before the court; that either a next friend or a guardian ad litem has been duly appointed for each and every infant, whether born or unborn, who is now or may hereafter be in any way interested in the trust shares hereinafter mentioned; that all persons, whether minors or of age, and whether in esse or in posse, who are now or who may hereafter be interested in the trust shares hereinafter mentioned, have been made parties to this action, and have either appeared herein or been duly served with process herein and with copies of all the foregoing pleadings.”

Did the court have the power and authority, under the facts and circumstances of this case, to render the judgment heretofore set forth? We think so. The able attorney for Annie L. Gannon, the coguardian of Anne Cannon Reynolds II, thought a court of equity had such power,' and in a letter heretofore set forth cited authorities. We quote from same: “In Bank v. Alexander, 188 N. C., 667 (671), we find: ‘The defendants excepted on the ground that the judgment is not binding upon the unborn contingent remaindermen. As we understand the record, the contingent remaindermen are represented not only by the trustee but by living members of their class, and under these circumstances the exception must be overruled. The question of law is discussed in the following cases and need not be repeated here. Ex parte Dodd, 62 N. C., 98; Overman v. Tate, 114 N. C., 571; Springs v. Scott, 132 N. C., 548; McAfee v. Green, 143 N. C., 411; Lumber Co. v. Herrington, 183 N. C., 85.” Paragraph 3, pp. 671-2, thoroughly discusses the right of a court of chancery over infants and to settle controversies such as was done in the present case.

In Metzner v. Newman (224 Mich., 324), 38 A. L. R., 98 (accurately stated in the syllabus), we find: “When infant’s property rights are involved in litigation, the general guardian or guardian ad litem may negotiate for a compromise of the litigation, and, if the court approves it after an examination of the facts, the judgment or decree will be binding on the infants. When a chancery court has jurisdiction of the subject matter and parties some of whom are infants, it may pass upon and adjudicate the rights and equities of the infants, and the decree will be binding upon them. The adjustment of differences in a family over the settlement of estates will be favored even where infant legatees are interested, provided the proposed compromise of the differences is submitted to the court and a finding made that the settlement and compromise are for the best interests of the infants. A finding by the chancellor, with all the facts before him, that a will contest was in good faith, and that a compromise was for the best interests of infant legatees, will not be disturbed on appeal.” At p. 105 we find: “This annotation is limited to compromises of contests over wills or settlement of estates, and other contests relating to property in which infants are interested.” (Annotation at p. 105) : “It has been held, however, in a number of cases, that the court has power to sanction compromises in the settlement of estates, or litigation generally, in which the property rights of infants are concerned,” citing many authorities, including cases from U. S., Ill., Mass., Miss., Tenn., and numerous cases from England. Reynolds v. Reynolds, ante, 254.

In Spencer v. McCleneghan, 202 N. C., 662 (671), it is said: “We think those in esse or in posse are properly represented in this proceeding; all parties who could possibly have any interest in the estate are parties to this action and the infant and all unborn children who might have any interest are properly represented. From a careful examination of the facts, as found by the court below and the judgment rendered, we think a court of equity has jurisdiction in the matter. We think the judgment fair to all and not prejudicial to the parties who have either vested or contingent interests. The policy of the law is to encourage settlement of family disputes like the present, so as to promote peace, good will, and harmony among those connected by consanguinity and affinity. Equity favors amicable adjustments. . . . The court below found the facts at length with care, and rendered judgment that it was to tbe best interest of all that 'the terms and provisions of said contract ... be accepted, ratified, and approved and carried into effect.’ ” In the above case are cited many cases sustaining the above principle.

In Price v. Price, 133 N. C., 494 (504), Justice Henry G. Connor said: “The principles by which courts of equity are governed in sustaining and enforcing such contracts as to the one set out in this record are well settled and strongly stated by Lord Hardwicke in the case of Stapilton v. Stapilton, 1 Atk., 2 (2 White & Tudor’s L. C., 1675, star p. 824). In speaking of a contract made for the purpose of settling a family controversy he says: 'It was to save the honor of the father and his family, and was a reasonable agreement; and, therefore, if it is possible for a court of equity to decree a performance of it, it ought to be done. . . . And, considering the consequence of setting aside this agreement, a court of equity will be glad to lay hold of any just ground to carry it into execution, and to establish the peace of a family.’ ”

In re Will of McLelland, 207 N. C., 375 (376), Chief Justice Stacy said: “Family settlements are to be commended (Tise v. Hicks, 191 N. C., 609, 132 S. E., 560), and much is permitted to be done by consent of the parties,” etc.

In the cases of Bank v. Alexander, supra, and Spencer v. McCleneghan, supra, each of these involved a trust in which there were future and contingent rights of infants, both in esse and in posse.

' In Overman v. Tate, 114 N. C., 571 (574), cited in the Bank case, supra, we find: “In accordance with this policy it was laid down by Lord Hardwicke in the leading case of Hopkins v. Hopkins, 1 Atk., 590, that, 'If there are ever so many contingent limitations of a trust it is an established rule that it is sufficient to bring the trustees before the court, together with him in whom the first remainder of inheritance is vested; and all that may come after will be bound by the decree, though not in esse, unless there be fraud and collusion between the trustees and the first person in whom the remainder of inheritance is vested.’ ”

In 2 Pomeroy Equity (4th Ed.), sec. 850, it is said: “Compromises, where doubts with respect to individual rights, especially among members of the same family, have arisen, and where all the parties, instead of ascertaining and enforcing their mutual rights and obligations, which are yet undetermined and uncertain, intentionally put an end to all controversy by a voluntary transaction by way of a compromise, are highly favored by courts of equity.”

In 69 C. J., at page 1274, we find the statement: “As a general rule, the beneficiaries under a will may validly contract with other interested persons in regard to their respective interests in the estate, and in this manner effectively compromise their claims, if they are conflicting, or else so divide or settle tbe estate tbat all are bound by tbe agreement. Sucb contracts, being in tbe nature of family settlements, they are usually favored by tbe courts,” citing a number of cases, including Spencer v. McCleneghan, supra.

A good statement of tbe rule, together witb its limitations, is found in 65 C. I., pp. 683-4, as follows: “A court of equity bas power to do whatever is necessary to preserve a trust from destruction, and, in tbe exercise of sucb power, it may, under some circumstances, modify tbe terms of a trust to preserve it. Tbe court should have due regard for tbe intention of tbe settlor, and, in exercising its jurisdiction, should be exceedingly cautious. Tbe power of tbe court is exercised not to defeat or destroy tbe trust but to preserve it. Tbe exercise of tbe power can only be justified by some exigency which makes tbe action of tbe court in a sense indispensable to tbe preservation of tbe trust, and in sucb cases tbe court may, as far as may be, occupy the place of the settlor and do with the trust fund what the settlor would have done had he anticipated the emergency. Tbe trust will not be modified in violation of tbe set-tlor’s intention, merely because tbe interest of tbe parties will be served by doing so. Where a contingency arises, however, sucb tbat tbe estate may be totally lost to tbe beneficiaries, equity will not permit sucb loss for lack of power to modify tbe trust.”

If tbe present settlement is rejected, and tbe parties relegated to long and exhausting litigation, tbe primary purpose of tbe trusts in question will be defeated. By tbe present judgment, tbe primary objects of tbe trust are preserved. As is stated in tbe case of Gurtiss v. Brown, 29 Ill., 201 (230) : “Exigencies often arise not contemplated by tbe party creating tbe trust, and which, bad they been anticipated, would undoubtedly have been provided for, where the aid of tbe court of chancery must be invoked to grant relief imperatively required; and in sucb cases tbe court must, as far as may be, occupy tbe place of tbe party creating tbe trust, and do witb tbe fund what be would have dictated bad be anticipated tbe emergency. . . . From very necessity a power must exist somewhere in tbe community to grant relief in sucb cases of absolute necessity, and under our system of jurisprudence tbat power is vested in tbe court of chancery.”

Tbe cases of Williams v. Williams, 204 Ill., 44, which is cited in tbe Spencer case, supra, and Wolf v. Uhlemann, 156 N. E., 334, which cites Williams v. Williams, supra, are similar in principle to tbe present case.

Speaking of a chancellor, Black’s Law Dictionary (3d Ed.), p. 308, says: “He is tbe general guardian of all infants, idiots, and lunatics, and bas tbe general superintendency of all charitable uses, and all this, over and above tbe vast and extensive jurisdiction which be exercises in bis judicial capacity in the supreme court of judicature, of which he is the head. Wharton.”

The court of chancery is a court having the jurisdiction of a chancellor; a court administering equity and proceeding according to forms and principles of equity.

Const, of N. C., Art. IV, see. 1, in part is as follows: “The distinctions between actions at law and suits in equity, and the forms of all such actions and suits, shall be abolished; and there shall be in this State but one form of action for the enforcement or protection of private rights or the redress of private wrongs, which shall be denominated a civil action,” etc. This section abolished the distinction between actions at law and suits in equity, leaving such rights and remedies to be enforced in the one court, which theretofore had administered 'simply legal rights. Peebles v. Gay, 115 N. C., 38 (42). Under this section and Article IV, sec. 20, the Superior Courts became the successors of the courts of equity, having their jurisdiction and exercising their equitable powers, unless restrained by statute. In re Smith, 200 N. C., 272, 274. Legal and equitable rights and remedies are now determined in one and the same action. Woodall v. North Carolina Joint Stock Land Bank, 201 N. C., 428.

The able, careful, and painstaking judge sat in the court below as a chancellor — as general guardian of both infants. There existed a controversy between the two guardians of Anne Cannon Reynolds II. The two infants, Anne Cannon Reynolds II and Christopher Smith Reynolds, as it were, are put in the “lap of the chancellor.” The chancellor in the court of equity and conscience heard all the evidence. His jurisdiction was to hear and determine the cause and to enter judgment. The judgment which was entered is fully established by reason and authority. As to the equity of the settlement — we think all of the principles of equity and natural justice require that the issues existing between the parties be settled for all time, and that the parties should not be relegated to the litigation which is inevitable if the judgment of the court below is reversed' — and we think it should not be reversed. This seems to be the wish of all parties, except one of the guardians (Annie L. Cannon, coguardian of Anne Cannon Reynolds II), and the Safe Deposit and Trust Company of Baltimore, trustee, which naturally wants to be protected on account of the trust funds held by it. The present judgment gives Anne Cannon Reynolds II, the infant, some $9,000,000. The former judgment of 4 August, 1931, gave her only $2,000,000. This, at the time, was satisfactory to Annie L. Cannon, coguardian of Anne Cannon Reynolds II, but not so with the other guardian — -the Cabarrus Bank and Trust Company. It asked to be heard in a court of equity, which was allowed. The differences between these guardians cannot affect the rights of these infants. May we be so bold as to quote an old adage: “When passion blows the breeze, let reason guide the helm.” We think the Superior Court of Forsyth County had power and authority to hear and determine the cause and had jurisdiction over the trustee, which enabled the court to proceed to judgment.

We do not think the appearance of the trustee was special. In the original action herein, the trustee entered a general appearance and filed an answer, from which we quote as follows: “It (the trustee) submits its rights, duties, and discretion in the premises to the determination and decision of this honorable court.” Thereafter, when the Cabarrus Bank and Trust Company filed its motion in Forsyth County to set aside the original judgment herein, the trustee again, without any qualification, came in and filed an answer to said motion. The Reynolds heirs filed their petition, setting forth the offer of settlement, the trustee again came in and filed an answer to said petition, but in the beginning of the answer, for the first time these words appeared: “Specially appearing under protest, as hereinafter stated.” An analysis of this last-mentioned answer, however, will show that the above-quoted words were not used for the purpose of entering a special appearance in the sense that the trustee was either denying or withholding its personal appearance, but the words were used for the purpose of insisting upon the contention that even with the trustee personally before the court, the court was without jurisdiction, because: “. . . all of the property and investments held in said three trusts are located in the State of Maryland, which is the sole sifais of the administration of said trusts. Respondent (trustee) is advised, and therefore says, that the courts of said state alone have jurisdiction over the administration of said trusts, and that especially the Circuit Court of Baltimore, a court of said state having full equity jurisdiction, is the proper court to finally determine such questions as have arisen in reference to the administration of said trusts, and has, by virtue of the proceedings hereinbefore recited, already obtained specific jurisdiction to finally determine such questions.”

In Buncombe County v. Penland, 206 N. C., 299 (304), we find: “If a defendant invoke the judgment of the court in any manner upon any question, except that of the power of the court to hear and decide the controversy, his appearance is general.”

The trustee has personally appeared in this one action on three different occasions, to wit: (a) by filing an answer when the action was first instituted in August, 1931; (b) by filing an answer to the motion of the Cabarrus Bank and Trust Company to set aside the original judgment; and (c) by filing an answer to the petition of the Reynolds heirs setting forth the proposal of settlement. At no time has it taken the position that it itself was not personally before the court. It has simply con tended that the court was without jurisdiction because the trust res was beyond the border of the State. This, of course, was not the entry of a special appearance in so far as personal jurisdiction over the trustee was concerned.

The record shows that the trustee has repeatedly acted upon the assumption that the trusts in question were being administered under the supervision of the courts of this State. "Whenever any question has heretofore arisen in reference to the administration of said trusts, such question has been referred to the courts of this State for decision. We refer to the following instances:

(a) Upon the death of Katherine 8. Johnston, a question arose as to the amount of net income distributable to each child of R. J. Reynolds after attaining the age of twenty-one years, and before attaining the age of twenty-eight years. This question involved a construction of the will of R. J. Reynolds. For a determination of this question, the trustee applied — not to the courts of Maryland — but to the courts of North Carolina. In order to have said question determined, the trustee instituted an appropriate action in the Superior Court of Forsyth County, North Carolina, wherein said question was submitted to and determined by the court, a judgment settling this question being signed- by Hon. Wm. F. Harding, judge presiding at the May, 1927, civil term of the Superior Court of Forsyth County. The judgment so rendered has ever since been complied with by the trustee in the administration of the trust.

(b) Thereafter, a further question arose in reference to the proper construction of paragraph 6 of Item 4 of the will of R. J. Reynolds. For a decision of this question, an action was instituted in the Superior Court of Forsyth County by young R. J. Reynolds against the trustee and all the other trust beneficiaries, for the purpose of obtaining a construction of said paragraph of the will of R. J. Reynolds. In that action, the trustee filed an answer and a judgment was entered, from which an appeal was taken to the Supreme Court of North Carolina, by which the judgment was affirmed. Reynolds v. Trust Co., 201 N. C., 267.

(c)When this original action was instituted, in August, 1931, the trustee came in and voluntarily submitted itself to the jurisdiction of the court. There was no qualification whatever to its appearance. Although the original judgment which was entered herein altered the terms of the trust instruments in a radical manner, the trustee raised no question as to the jurisdiction of the court to enter such judgment. On the contrary, in a subsequent pleading, it states: “Your respondent was advised that this court did have jurisdiction, and that all necessary parties were brought in to sustain such jurisdiction and make the judg- meiit or decree which was passed valid and binding.” After the entry of said original judgment, the trustee filed an itemized report showing in detail a compliance with said judgment.

The trusts in question are “resident trusts” of North Carolina, over which the courts of this State have primary jurisdiction. For instance, the following facts are noted: (a) The wills creating the trusts were executed by persons who were residents of and domiciled in North Carolina. (b) These wills were probated in North Carolina, (c) The corpus of the trusts consisted, and still consists, of intangible personal property, to wit: Bonds and corporate stocks, (d) When said wills were executed and probated, the beneficiaries of the trusts were residents of and domiciled in North Carolina, (e) Although it is true that a Maryland corporation is appointed trustee in each of the two wills in question, it is also true that each will (E. J. Eeynolds and Katherine S. Johnston) gives to residents of North Carolina the power to change such trustee at any time. Hence, the courts of this State have primary jurisdiction thereof.

In 1 Perry on Trusts and Trustees (7th Ed.), sec. 71, p. 56, the following statement of the rule appears: “If a trust is created by the will of a citizen of a particular state, and his will is allowed by the probate court of that state, and a trustee is appointed by the probate court, courts of equity will have jurisdiction over the trust, although both the trustee and the property are beyond the jurisdiction of the court. Chief Justice Bigelow, in determining this point, said: ‘The residence of the trustee and cestui que trust out of the commonwealth does not take away the power of this court to regulate and control the proper administration of trust estates which are created by wills of citizens of this state, and which have been proved and established by the courts of this commonwealth. The legal existence of the trust takes effect and validity from the proof of the will, and the right of the trustee to receive the trust fund is derived from the decree of the probate court. If the trustee is unfaithful or abuses his trust, that court has jurisdiction to remove him in concurrence with this court on the application of those beneficially interested in the estate.’ ”

In Swetland v. Swetland, 105 N. J. Eq., 608, 149 Atl., 50, at p. 52, the Court said: “The rule of law is well settled that the courts of the testator’s domicile and of the state in which the will is probated have primary jurisdiction over testamentary trusts. McCullough’s Executors v. McCullough, 44 N. J. Eq., 313, 14 A., 642; Marsh v. Marsh’s Executors, 73 N. J. Eq., 99, 67 A., 706; Davis v. Davis, 57 N. J. Eq., 252, 41 A., 353; Murphy v. Morrisey & Walker, 99 N. J. Eq., 238, 132 A., 206; Hewitt v. Green, 77 N. J. Eq., 345, 77 A., 25; 65 C. J., 895.

The Safe Deposit and Trust Company of Baltimore, trustee, acquired its title to the two testamentary trusts from testators domiciled in North Carolina and solely by reason of the effect of their wills and the laws of this State. Whatever uncertainty may have existed on this question has been settled by four decisions of the Supreme Court of the United States. Farmers Loan & Trust Co. v. Minnesota, 280 U. S., 204, 74 L. Ed., 371; Baldwin v. Missouri, 281 U. S., 586, 74 Law Ed., 1056; Beidler v. S. C. Tax Commission, 282 U. S., 1, 75 Law Ed., 131; First National Bank of Boston v. Maine, 284 U. S., 312, 76 Law Ed., 313.

The cases involved the right of states other than that of the domicile of the decedent to levy inheritance taxes on intangible personal property. They include every form of intangible property. The tax was held void in each case under the due process clause of the Fourteenth Amendment on the ground that such property can be transferred in only one place and under one law. It may be conceded that tax cases frequently do not furnish a safe guide for the decision of questions involving jurisdiction, but, since the decision in these cases are rested upon a concept of due process of law, there is no escape from the conclusion that they apply to all questions of transfer upon the event of death, and that such transfers occur in one place and under one law, and that judgments of the courts of that place define the instrument of title and give effect to the transfer of the property, which are entitled to full faith and credit in all of the states.

Flements of jurisdiction in this case: (1) Jurisdiction over the domicile of the creator of the trust and the instrument creating it. (2) Jurisdiction over one or more of the beneficiaries of the trust. (3) Jurisdiction over the whole or part of the property constituting the trust.

In this case the following classes of persons are represented by someone in esse: (1) Two claimants as issue of Zachary Smith Reynolds. (2) Three children of R. J. Reynolds and Katherine S. Johnston. (3) Grandchildren of R. J. Reynolds, the issue of his children who are now living. (4) A brother and sister of R. J. Reynolds. (5) Issue of the brothers and sisters of R. J. Reynolds. All possible classes who could be interested in the outcome of this case are represented.

We have read with care the able and exhaustive briefs of the Safe Deposit and Trust Company of Baltimore, trustee, and that of Annie L. Cannon, coguardian of Anne Cannon Reynolds II. We cannot sustain the contention made in their briefs. But Annie L. Cannon, eoguardian of Anne Cannon Reynolds II, in closing her brief, says: “She has sought to lay before the Court all the pertinent facts within her possession bearing upon the issues involved, and to call to the Court’s attention the legal authorities governing same. She has the care and custody of this child and paramounts its interest and welfare above all else. She prays tbis honorable court, in the exercise of its sound judgment, to instruct her in the further performance of her duties.”

In the judgment of compromise the State of North Carolina was awarded $2,000,000 in settlement of its inheritance tax claim. It seems as if the Safe Deposit and Trust Company of Baltimore, trustee, alone appeals from the judgment. In the brief of the Attorney-General and his able assistants is the following: “There is still an open question in this State as to the basis of computation of the inheritance tax in cases where the property rights of the parties have been litigated and their interest determined by a compromise judgment. The holdings in other jurisdictions, where this question has arisen, are about evenly divided and contradictory. Note 18 A. L. R., 116. In the most favorable aspect of the controversy, the State could not hope to be materially benefited by independently litigating the serious factual questions involved, either as to the amount or security of the tax, and, therefore, the offer of compromise was accepted.”

The brief of the Safe Deposit and Trust Company of Baltimore, trustee, expressly waives all questions as to the imposition of the tax except the question of its constitutionality as being violative of the Fourteenth Amendment to the Federal Constitution. This suggested constitutionality is referred to two grounds: (a) That the imposition of the tax is by retroactive law, since R. J. Reynolds died before the enactment of the first State Revenue Act containing the applicable section of the law. (b) That the trust estate had no situs in North Carolina, and this State had, therefore, no taxing jurisdiction. The Attorney-General and his assistants, in an elaborate and carefully prepared brief, argue and cite authorities contrary to the view taken by the Safe Deposit and Trust Company of Baltimore, trustee, and we agree with their view without setting same forth in detail.

N. C. Code of 1935 (Michie), 7880 (1). “Fifth. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment, when made, shall be deemed a transfer taxable under the provisions of this act, in the same manner as though the property to which such appointment relates belonged absolutely to the donee of said power, and had been bequeathed or devised by such donee by will, and the rate shall be determined by the relationship between the beneficiary under the power and the donor; and whenever any person or corporation possessing such power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related and succeeded thereto by will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure.” Sec. 7880 (17) — the trustee to deduct tax.

In the former opinion of this Court (206 N. 0., 276-290), on the appeal of the Cabarrus Bank and Trust Company, coguardian of Anne Cannon Eeynolds II, we said in the main opinion: “The alleged will of Zachary Smith Eeynolds appears to be inoperative and void.” The wills and deed of the parents of Zachary Smith 'Eeynolds gave him the right to make a will — exercising the power of appointment given him was one of the serious and bona, fide questions that brought about the compromise. He made the will in controversy to his brother and sisters, who made the “offer of settlement.”

But, however conclusive the arguments as to the legality and constitutionality of the tax, we do not need to rely on the strict application of these legal principles to sustain the judgment of the court below, affirming the tax. It was a settlement by compromise and agreement in a matter which was a legitimate subject of compromise, in a court of competent jurisdiction, with all the parties affected represented. The appeal is by the trustee alone in this case, all the cestuis que trustent having agreed, could not properly raise the propriety of the action of the chancellor in advising the guardians of infant parties, and in approving the compromise.

A liberal construction will be given to inheritance tax statutes to the end that all property fairly and reasonably coming within their provision may be taxed. State v. Scales, 172 N. C., 915. See, also, Norris v. Durfey, 168 N. C., 321. Under this liberal construction in favor of the government, every transfer of property that could be reasonably brought within the purview of the law has been subjected to taxation, Norris v. Durfey, supra. “The theory on which taxation of this kind on the devolution of estates is based and its legality upheld is clearly established and is founded upon two principles: (1) A succession tax is a tax on the right of succession to property and not on the property itself. (2) The right to take property by devise or descent is not one of the natural rights of man, but is the creature of the law” — Brown, J In re Morris Estate, 138 N. C., 259, cited and approved in Rhode Island Hospital Trust Co. v. Doughton, 187 N. C., 263, 267. See Waddell v. Doughton, 194 N. C., 537.

In the judgment is the following: “60 (f). Upon a thorough and complete consideration of all the facts and circumstances relating to the claim of the State of North Carolina for said taxes, the court finds as a fact that the settlement of the taxes herein referred to is for the best interest of all parties concerned, including the infants, Anne Cannon Reynolds II and Christopher Smith Reynolds, and said settlement is hereby fully approved by the court, and the guardians of said infants are hereby advised, instructed, authorized, and empowered to participate in said settlement on behalf of said infants, and it is hereby ordered and decreed that the Safe Deposit and Trust Company of Baltimore, trustee, out of said trust funds, pay to the State of North Carolina the sum of two million dollars in full settlement of any and all claims or demands which the State now has or may hereafter have by reason of the things and matters set forth in the intervening complaint herein, such payment to be made solely out of the trust estates created by the will of R. J. Reynolds and the will and deed of trust of Katherine S. Johnston, of which Zachary Smith Reynolds was the first beneficiary in proportion to their respective values as of the date of this decree, and nothing herein to impose any personal liability upon any of the parties to this action. That the said sum of $2,000,000 is to be paid to the State of North Carolina when and if this decree becomes effective, and shall be in full settlement of any and every claim of the State of North Carolina for inheritance taxes, penalties, and interest.”

Under the facts and circumstances of this case, we think the settlement of taxes correct. The court below in the judgment (I) says: “That the original judgment entered herein on 4 August, 1931, be and it hereby is modified as follows,” etc., and sets forth wherein it is modified. We think all this was done in compliance with the former opinion of this Court, In re Reynolds, supra.

Frequently, on changed conditions, equity steps in and gives relief. In Starkey v. Gardner, 194 N. C., 74, it was in regard to restrictive covenants in deeds. In Raleigh v. Trustees of Rex Hospital, 206 N. C., 485, equitable relief was granted on account of changed conditions, and the board of trustees of Rex Hospital was permitted to borrow money by giving a lien on the property to remodel present building or erect new building. In the Curtiss case, supra, we repeat: “From very necessity a power must exist somewhere in the community to grant relief in such case of absolute necessity and under our system of jurisprudence that power is vested in a court of chancery.”

All the facts are fully, elaborately, and carefully set out in the record and the judgment which we set forth above, covering every aspect of the controversy. Due care has been taken in so important a controversy, where the property rights of infants are concerned, to set forth all the facts in the case. We think there was sufficient evidence to support the findings of fact in the court below on the different aspects of the controversy.

The court below found the compromise, as embodied in the judgment appealed from, fair, just, and equitable in regard to the property rights of these infants and all parties who had an interest, contingent or otherwise. The court below had power and authority to render the judgment. In this jurisdiction the courts, for perhaps a hundred years, have upheld family settlements, and the general policy of the courts has been to encourage compromise of litigation. In regard to infants, this power and authority is lodged in the chancellor in a court of equity. It seems as if justice and righteousness to the infants and all parties has been embodied in the judgment, and should bring peace and harmony. "We do not think that any of the exceptions and assignments of error made by the appealing parties can be sustained.

It is the duty of both of these guardians to set up this judgment in the suit now pending in the Circuit Court of Baltimore, Maryland, heretofore mentioned.

For the reasons given, the judgment of the court below is

Affirmed.