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As part of a plot to cut off the water supply of the local ranchers and thus drive them from their land, Watkins, a crooked attorney, and his partner, Haines, are buying up the land in the valley. Tex, ignorant of their swindle, accepts Haines's offer to homestead the land. Tex's eyes are opened by Betty Lawson, daughter of the gang's antagonist, rancher Lawson, when Betty informs him that the object of homesteading is to cut off the rancher's water supply, thus forcing them to sell their land cheaply to Haines. In his effort to control the valley, Haines arranges for his henchman, Slim, to be elected sheriff, and lawlessness begins to rule the town. When Tex opposes Haines's brand of law, he is accused of murder, forcing Betty to hide him in a cave. Lawson is next in line for elimination, and he, too, is accused of murder, thrown in jail and threatened by a lynch mob. Tex and his sidekick, Missouri, ride to Lawson's rescue, and then force Haines and Watkins to confess that the homesteading claims are illegal. With peace restored to the valley, Betty convinces Tex to stay on as foreman of the ranch.