(A/N, I have only seen the movie, I have not read the books, if I get some of the lore wrong, please correct me.)
Prologue
Man in moon called the guardians together at the North Pole. Sandman saw the northern lights and began to feel fear.
He flew to the North pole as he was bade, and the light from the Moon fell upon Sandman as the others gathered. The shadow of a woman and then an infant played across his face.
"Does that mean what I think it means?" Jack asked.
"Sandy... How could you do it? We cannot lay with mortals!" Santa shouted at him.
Sandman looked down at his feet.
Jack rubbed his chin, "Well... There's nothing we can do about it now... Or are we gonna kick Sandy out of the Guardians?" Jack asked.
Sandman looked up, wide-eyed.
"No, no, we can't do that... Man in Moon, what do you suggest?" Santa said looking up at the moon.
The man in the moon did something he hadn't done for a long time, he spoke aloud, "Watch the child, we are the guardians of childhood, he will get no special treatment, except for this. A day may come when he exhibits power like his father, if that day comes, we will teach him to be like us." He said quietly, his voice filling the room.
Santa folded his hands together, "Right... I guess that's all there is to it for now..." he said uncomfortably, walking back to his workshop. Toothfairy flew off nervously, Jack Frost flew with her and the Easter Bunny went back to his Warren. Sandman looked to the moon again.
"My friend, I remember when you were a falling star, I made a wish upon you. Do you remember the wish?" He asked.
He nodded.
"Protect the dreams and wishes of children, including your child. Protect them all." The light from the moon faded.
8 months later, a child was born. The mother, remembering his father, named him, Morpheus.