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Redwood Valley residents raise $50,000 for blasting a mountain tunnel to bring a new railroad there. Town leader Bidwell () engineers a plot to steal the money and to blame it on the Reno Kid () who has recently broken out of prison in order to clear himself of false charges that sent him there and caused him to lose his ranch. The badly-wounded sheriff turns his badge over to Red Ryder (). Reno visits his wife, Molly () and their ailing son Johnny (), and Red, also wounded, is brought there by Little Beaver (. There, Red begins to believe Reno's story about being innocent.

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