Everyone in Willow Town had heard of old Mr Clatters, who lived on Willow Hill and had a reputation as a mean and cantankerous fellow. Ned and Dick decide to show they aren't afraid by going to visit him, and to prove they've done so they promise to bring back a note from Mr Clatters to show their friends.
At first Mr Clatters is hostile, as he believes Ned and Dick are there to tease and torment him, but they win him over when they foil and catch a thief who is trying to steal Mr Clatters's gold - wealth that he was rumoured to have collected while a prospector in Cedrington. After the thief has been seen off, Clatters confesses that he does have gold, but that he has decided to put it in the bank and buy a cottage in town. Ned and Dick promise to visit him in his new house and help him in the garden. In return, Clatters signs their note with the words, 'Ned and Dick have done me a great service. I consider them the best friends I've ever had.'
Rex Derwent and Peter Drake prepare to take Peter's Australian terrier, 'Dim', to their local Dog Show. The night before the show, Rex overhears two men plotting to 'take care' of Sam Stemmer's dog Foxo to spoil his chances at the show. Rex warns Sam and finds a packet of red dye the two ne'er-do-wells have dropped.
At the dog show the next day, Sam informs them that Foxo has indeed been covered with red ink. The boys suspect Luke Dingwall (who has entered his dog, Lee of Lumsden) and his friend Mr Pellingham, and when they see that Pellingham's shirt has a red stain, they confront him in front of the judges and show the packet of red ink Rex found as proof.
