In the East Side Kids' clubhouse, Muggs McGinnis (Leo Gorcey) laments the epidemic of mugging that has been plaguing their streets. While waiting outside a store that afternoon, the boys witness a man being attacked in the alley and come to his defense, chasing away his assailants. In gratitude, the man, millionaire John Cortland (Herbert Heyes), hands Muggs his business card. When the cynical Muggs tosses the card in a garbage can, Glimpy McClosky (Huntz Hall) digs it out and finds the man's cash-laden wallet in the trash.
After the boys deliver the wallet to Capt. Mathews (Noah Berry, Sr.) of the police department, the captain mistakes them for the thieves and arrests them. Cortland soon arrives at the police station to claim his wallet, however, and identifies the boys as his rescuers. Upon discovering that the boys long for a gymnasium, Cortland invites them to his house the next day. There, Cortland shows them his son John Jr.'s basement gymnasium, and after explaining that John is overseas fighting, he offers the boys the use of the facilities.
Escorting the boys upstairs, Cortland introduces them to his pretty daughter Louise (Louie Currie) and his son Roy (Johnny Duncan), whose hand has been sprained. Noting Roy's injured hand, Muggs begins to suspect that he was involved in the robbery, but when Capt. Mathews asks for a description of the thieves, Muggs refuses to cooperate. Soon after, Louise's fiancé, French soldier Lt. Andre Dupree (Stanley Brown), arrives, and Louise informs her father that all the servants have quit, thus jeopardizing a dinner party she had planned for that evening. Attracted to Louise, Muggs suggests that his mother (Mary Gordon) and Mrs. McClosky (Patsy Moran) would be happy to cook and serve for the party.
When Muggs overhears Andre drop his French accent during a phone conversation, he begins to suspect that he is a phony and decides to follow him. Muggs and Glimpy trail Andre to the Zig Zag Club, where he meets his paramour, showgirl Maizie Dunbar (Iris Adrian). Deciding to tell Louise the truth about her fiancé, Muggs and Glimpy return to the Cortland mansion, but Louise refuses to believe their story. Meanwhile, the other boys are walking past the neighborhood pool hall when they see Roy playing pool with two of the robbers. When Muggs returns to the clubhouse, the boys tell him about spotting Roy at the pool hall.
Later that night, Muggs takes Maizie to the Cortland party, and when she sees Andre flirting with Louise, she jealously confronts him. After overhearing their heated conversation, Louise finally realizes that Andre is a gigolo and asks him to leave. Later, the doorbell rings, and when Muggs answers it, he is handed a telegram, notifying the Cortlands of John's death in combat. Summoning Cortland from the dinner table, Muggs gives him the bad news. Grief-stricken, Cortland faints and the boys carry him to his room. While upstairs, they sneak into Roy's room and find a cap worn by one of the robbers. Muggs vows to reform the boy, and after the party, the boys follow Roy to the pool hall.
In the ensuing fight, Roy runs away and Muggs and the others chase him. During the mêlée, the crooks capture Skinny (Billy Benedict) and take him hostage. When the boys catch Roy, Muggs challenges him to a boxing match to teach him a lesson. Hearing shouts coming from the gymnasium, Cortland goes to investigate and overhears Muggs interrogating Roy about the robbery. Soon after, Louise appears and announces that she has just received a phone call from Lefty (Gabriel Dell), one of the crooks, who is threatening to harm Skinny if Roy informs on him. Angered, Roy agrees to lead the boys to Lefty's hideout. Once there, a brawl ensues and Muggs sends Roy home to safety.
After subduing the crooks, Muggs and the boys deliver them to Capt. Mathews at police headquarters. Soon after, Roy enters the captain's office and turns himself in. When Muggs eloquently defends Roy and pleads for leniency, the captain decides to release Roy and suggests that Muggs champion the boy's case in court. Just then, Cortland arrives and, after forgiving his son, offers Muggs and the boys his heartfelt thanks.Leo Gorcey as Muggs McGinnis
Huntz Hall as Glimpy McClosky
Billy Benedict as Skinny
Al Stone as Herbie, Glimpy's cousin
David Durand as Danny (a.k.a. Dave)
Jimmy Strand as Pinkie (a.k.a. Lou)
Buddy Gorman as Stinkie (a.k.a. Slug)
Bobby Stone as Rocky (uncredited)
Gabriel Dell as Lefty
Louise Currie as Louise Cortland
Noah Beery as Captain Mathews
Iris Adrian as Mazie Dunbar
Herbert Heyes as John H. Cortland
Robert Greig as Spevin - Cortlands' Butler
Johnny Duncan as Roy Cortland
Stanley Brown as Lt. Andre Dupree
Patsy Moran as Mrs. McClosky
Mary Gordon as Mrs. McGinnis
Pat Costello as Spike
Bernard Gorcey as Messenger with Telegram (uncredited)
Merrill McCormick as An Arab (uncredited)
Pat McKee as Fink, the Pool Hall Proprietor (uncredited)