Ned is caught in a lie by Dr. Gordon and decides to run away, encountering a drifter mistreating a circus pony. After Ned intervenes, the pony adopts him, leading to the man Rundle accusing him of theft. The misunderstandings escalate but are cleared up after Ned becomes a hero rescuing Squire Armstrong's daughter.

Ned ignores Dr. Gordon's warning about keeping Jonah the pony away from yew leaves, which could poison him. When Jonah does indeed become sick, Dr. Gordon cannot leave John Danby's ailing wife, so it is up to Jenny, Ned, and Black Beauty to save the pony's life.