Feeling like an outsider, Coverdale decides to talk to the only other individual involved with Priscilla, Mr. Moodie. The day after his encounter with Zenobia, Priscilla, and Westervelt, Coverdale goes to the local saloon that Moodie frequents. Moodie arrives late in the evening, and—after Coverdale offers to treat him to lunch and wine—Moodie agrees to tell his story.

Twenty-five years previously, Moodie was a wealthy but superficial man named Fauntleroy. Married to a beautiful and noble woman, Fauntleroy failed to appreciate her goodness. The two had a baby, but Fauntleroy loved the child as a possession rather than a daughter. He spent his money foolishly and, when his funds were nearly depleted, committed a dishonorable crime, which led to his wife’s death and his own bankruptcy.

Fauntleroy fled to New England, where he lived as a pauper. His second marriage, to a poor woman, brought him another daughter. That wife also died, and Fauntleroy alone brought up his second daughter, who was timid and frail but kind. Fauntleroy told this younger daughter stories of his former life and the beauty of her older half-sister. The daughter, Priscilla, became a topic of neighborhood gossip because of her ghostly appearance.