The Eagle and his men, after seizing control of northern California, seek now to take over the south, setting up operations in Los Angeles in the tavern/inn at the cuartel. Meanwhile, Commandante Toledano leaves the cuartel for temporary duty in San Diego, putting Garcia back in charge. Garcia is warned that stolen gunpowder was heading toward Los Angeles. Neither know that the Capitan's wife is one of the Eagle's brood. Vargas arrives, suspects Diego of being Zorro, captures him and dresses him as the Fox. Zorro escapes, and alerts Garcia to get the stolen gunpowder to safety up north.; Elena leaves her baby at Diego's doorstep, distraught that her husband was imprisoned for speaking out against the unjust taxes. Zorro steps into the picture to rescue Jose Lopez and reunites him with his wife and child.