Fred and Lamont are gone, and Phil Wheeler takes control of ""The Sanford Arms"" hotel. When Esther comes to collect the rent money, it is explained that Fred and Lamont moved to Arizona due to Fred's health.

Phil's plan to teach people to be more assertive backfires when a student decides to sue him. The matter is worked out when Phil, with the help of one of his daughter's friends, gets the student to realize he can be assertive.

Nathaniel's grandparents come for a visit. As usual, they tell Phil that Watts is no place for a child to live. Nat decides that he must go to San Diego with his grandparents to stop them from asking. After a short time, Nat returns.

To Esther's dismay, Phil tries to obtain a liqour license for The Sanford Arms. His attempts are halted when a past incident stands in his way.