Laura and her horse, Bunny, are picked to win at the horse race in town. Since Mrs. Oleson doesn't want Laura to win, she buys a great thoroughbred for Nellie to ride.

Mr. Edwards keeps Matthew at his place, but Nancy Oleson tells on him. A judge comes and rules that Matthew be placed in an institution. Then Mr. Edwards makes a statement that everyone is crazy sometime. He convinces the judge to allow the boy to stay with Mr. Edwards.