- Here we first meet "The Eagle" - Jose Sebastian Varga, who sends two of his men into the pueblo with kegs containing a load of stolen gunpowder. Meanwhile, Commandante Toledano is sent to San Diego to investigate the theft of the gunpowder, but his wife Raquel stays behind in Los Angeles - and we learn that she too is working for The Eagle.—rbecker28
- The Eagle calls a meeting in Monterey. He announces that most of California is under his control due to removing gun powder from all the cities, leaving them defenseless. The Eagle then announces that Los Angeles will be his new base of operations, though his agents question the wisdom of this decision considering the activity of Zorro there. Meanwhile, Capitan Toledano is reassigned to San Diego and leaves his wife, Raquel, to wait for him. Toledano asks Diego to keep her entertained while he is gone so that she will not flirt with other men. Toledano leaves Sgt. Garcia in charge and orders him to recover the stolen gunpowder when it is smuggled through Los Angeles. However, Raquel is working for The Eagle and gives Garcia a letter stating he no longer has to search for the gunpowder. He shows the letter to Diego, who recognizes it is a lady's handwriting rather than military correspondence. Diego realizes it is a trick and rides as Zorro to recover the gunpowder as it is smuggled over the pass. Zorro stops the smugglers, but must flee when Sgt. Garcia arrives. The smugglers convince Garcia that the barrels contain wine, so he escorts them to Los Angeles. While the smugglers are unloading the barrels into the tavern, Zorro and Bernardo sneakily replace all the barrels of gunpowder with real barrels of wine. The Eagle's agents later discover the trick when they catch Garcia and Cpl Reyes sampling the wine.
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