Cowhand Jimmy Wakely gives a stallion, "Spooky", to 16-year-old Perry, vacationing with rancher Aunt Jesica, who has taken the boy from the Sheriff's Association School. Prospector "Mossy" Stevens is murdered by claim jumper Sanders and a henchman. Chased by U. S. Marshal Bill Braden, Sanders forces Perry to change clothes with him and then he escapes on "Spooky." Perry chases Sanders but is shot by Braden who thinks he is the outlaw being chased. Jimmy and Aunt Jessica berate Braden for the shooting, and the Sheriff's Association school loses its funding because of Perry's suspected involvement of the murder of Stevens. Jimmy joins the Morgan-Bart mine-jumping gang, to the annoyance of gang-member Sanders. "Cannonball" finds "Spooky", and Jimmy learns that Sanders rode him after the murder of Stevens. Aunt Jessica reveals to Susan Braden, the Marshal's daughter, that Jimmy is working with the gang to clear Perry's name. Sanders overhears this, tells Morgan, who plots Jimmy's entrapment.