Charles Armstrong, the squire's nephew, arrives for a visit and soon quarrels with Albert and Ned. The boys are warned away from the sheep, who are about to lamb but one of them chooses not to during a race. Among the consequences is a struggle where Albert and Charles end up at the bottom of mine shaft.

Dr. Gordon and Black Beauty head to the quarry after a blast goes wrong and men are injured. Lawson is fired by the squire for negligence and in revenge he steals cash and horses, including Beauty. Beauty escapes, alerting Jenny and Kevin, who endanger themselves trying to stop Lawson.