[1][2] Violet, Klaus and Sunny Baudelaire are traveling on a train heading for Paltryville, the location of the children's new home, the Lucky Smells Lumbermill.

Upon arrival, the children learn that they will have to work at the mill, but as part of the deal, their new guardian, Sir (whose name is impossible to pronounce otherwise), will try to keep Count Olaf, their nemesis, away.

They meet Sir's more sympathetic partner, Charles, who shows them the library, which contains three books, one about the history of the lumbermill, one about the town constitution, and one donated by Dr. Georgina Orwell, the local optometrist, who lives in an eye-shaped building, which also resembles, suspiciously, the tattoo of an eye on their nemesis Count Olaf's ankle.

When they return to the mill, they find a memo from Sir informing them that if there is another accident, he'll place them under Shirley's care.

Violet is caught by Shirley and Flacutono, and Klaus manages to free Charles by trying to invent a fishing rod.

Sir enters the room, surprising Orwell and causing her to step backwards into path of the buzz saw, killing her.

Count Olaf is locked in the library, but he escapes from the window along with Foreman Flacutono, who is revealed to be the bald man with the long nose in disguise.

The last picture of The Miserable Mill shows Sir watching Olaf and his henchman escaping, while two students (a boy and a girl) prepare to board a school bus.