The tribe is furious. Daisy enters and feigns ignorance of her mock apprenticeship. Fountain is delighted he has finally confessed. Squirrel produces their agreement and, by the letter of the contract, her delight turns to horror when she realizes she must now marry Squirrel instead of David.
Buffalo wants his Medicine Man tortured but Squirrel calls for the penalty clause to be carried out immediately, thus making him Indian Royalty.
Rooster, anxious to punish him, insists that it's entirely possible for Squirrel to acquire magical powers before the day is out so he needn't marry Fountain on the spot. In the mean time, he should be punished for his lies.
Buffalo is enraged. Because of Squirrel, there will be no peace, the tresspassers must be executed, and his high-hopes of having his daughter marry a Cavalry solider are dashed. Squirrel mutters, "Is it my fault I never joined the Cavalry?"
Buffalo does not miss this deus ex machina. He tells Squirrel that if he were to join the Cavalry before marrying his daughter, he (Buffalo) would be so happy he'd over-look his treachery. Squirrel reluctantly agrees.
Everyone is happy, soon even Fountain. As the curtain comes down, the Cavalry soldiers put a uniform on Squirrel in order to mock him. Squirrel is horrified but Fountain falls back in love.
What a wond'rous sensation,
For a future that's brighter,
"Tra la la la la la la..."
My sweet, I've much sincerity,
Our marraige will be very nice
And there will be no sacrifice
Oh, happy hour, oh, happy day.
Oh, happy, happy, happy day!