Dale's mother having died, he has allocated the Small House, rent free, to his widowed sister-in-law and her daughters Isabella ("Bell") and Lilian ("Lily").

Mrs. Dale has no money for a dowry, but Crosbie thinks the squire might provide Lily with some fortune given that, in many ways, he treats her and Bell as if they were his daughters.

Thus, the Countess de Courcy views him as fair game and a viable match for her only single daughter still of marriageable age, Alexandrina, who had previously struck up a friendship with Crosbie in London.

Crosbie immediately begins having second thoughts; he is now engaged to two women and although he prefers Lily (who is younger, prettier and more intelligent), she is a country girl he can jilt with few repercussions, whereas Alexandrina is the daughter of a prominent family.

However, she refuses to entertain the idea of marrying another man and thus rejects repeated proposals from Johnny Eames, a family friend who has loved Lily since childhood (and who first confesses his feelings to her as soon as he hears about her engagement).

Mrs. Dale, the squire, Lord de Guest and Lady Julia all hope Lily will eventually agree to marry Johnny, but she chooses to remain true to the memory of her Apollo.

Meanwhile, Christopher Dale, the squire, encourages Bernard to court Bell, as he would be happy to see his niece and nephew marry and live together on the family estate.

When Mrs. Dale and her daughters feel Christopher is pressuring Bell to marry Bernard, they announce they will be leaving the Small House so they are no longer beholden to him.