John Browdie is visiting the Nicklebys. He and his wife are leaving the next day. Mrs. Nicklebly permitted them to come to tea, knowing that John helped her son. She is uncomfortable, for it isn't proper to invite people to tea before calling upon them first. Nicholas tells her she shouldn’t worry, as these people are unsophisticated. Realizing this, Mrs. Nickleby puts on a condescending, civil air and talks about how well meaning and well behavied the Browdies are.
Mrs. Browdie thinks Mrs. Nickleby is rather high in her notions but very kind. When the Browdies comment on how late it is, Mrs. Nickleby claims they are used to staying up this late for all the balls they attend. Kate tries to end the evening by taking over the conversation from her mother, who prattles.
There is a loud knock at the door, and Ralph Nickleby eneters. He asks them to hear him out. John gets between Ralph and Nicholas. Nicholas demands that Ralph leave.
Ralph tells them he is here to reunite Smike with his father. Nicholas believes he is lying. Squeers fetches Mr. Snawley, who embraces Smike. Snawley comments how angry he was when he learned that Smike had ran away from his guardians.
Smike begs Nicholas to let him stay with him. Nicholas tells Snawley that if he is Smike’s father and saw his son’s condition, he would not be willing to return him to Squeers’ school.
Ralph says that the boy is Snawley’s son by his first marriage. He separated from his wife, and the boy went to live with her. She told him the baby died when it was a year old. He recently got a letter from her when she was dying. She confessed to lying about the boy’s death to wound him. As the child was slightly retarded, she sent him away to school. When she could no longer pay, she abandoned him.
Ralph produces the documents proving this story to be true. Ralph tells them that the law is on his side. He could have sent for the troops, but he didn’t out of respect for Kate. Nicholas makes a sarcastic comment about how much Ralph regards Kate.
Smike refuses to go with Ralph and the other men. Squeers tries to drag him out. Nicholas attacks him and pushes him into Ralph He tells Snawley that Smike has chosen to stay with him.l He will not let Smike be returned to the school.
Mrs. Nickleby suggest that Mr. Snawley pay for the expenses they have had in supporting Smike, but everyone ignores her. Snawley calls Smike an ingrate for not letting him love him. Smike refuses to come with him. Squeers says that Smike is incapable of loving anyone. He never loved the schoolmaster or Wackford, who was like a brother.
Ralph isn’t surprised that the proud Nicholas won’t give up Smike. He knows that Nicholas considers himself a hero, but he warns that he’ll only bring misery to Smike. They leave.