It's the Christmas season, and everyone's in a rush to decorate the Cannonball in preparation for their annual caroling and gift delivery runs. Their plans are placed into jeopardy with the arrival of Homer Bedloe. He says that what they are doing is against railroad policy and he won't allow it. Kate hopes that Bedloe will have some heart, and she tries to use her best Christmas spirit in treating Bedloe with kindness to change his mind. Only Norman Curtis, the President of the Railroad, may be able to make Bedloe change his mind.

Homer Bedloe shows up unexpectedly. He's come to announce there will be a new general manager for the Cannonball, who will oversee the train's operations. That person is Uncle Joe. Uncle Joe begins to act like a tyrant in bossing around Charley and Floyd. Charley, Floyd and everyone in the valley are mad at Uncle Joe for his new operating rules. Charley and Floyd quit leaving Uncle Joe to operate the train on his own, which he doesn't know how do. That's exactly why Bedloe appointed Uncle Joe. Norman Curtis, President of the CF&W is arriving shortly to make an inspection. Kate gets Charley and Floyd to resume their jobs so that the train can look to be operating efficiently. They may have a problem in doing so after what Uncle Joe did to the train.