Playing with her friends in the abandoned stable of the old Penny estate, Sally discovers an easy-going tramp. Her imagination conceives him to be the long-lost Mr Penny. With the aid of a little circumstantial evidence, she persuades her friends to accept him as Mr Penny too. Late that night, they all creep into the old Penny house to help 'Mr Penny' recover the hidden treasure with which Sally's imagination has provided him. In the spooky house they get separated, each thinking the other is a ghost. They find no treasure, but 'Mr Penny' finds proof of Sally's parentage, and the next morning, when she is about to be taken off to the orphan's home it is 'Mr Penny' who saves the day.

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