The party arrives in Hagsgate, surprised to find a prosperous town with well-maintained houses and content residents. When Schmendrick crosses the hedge into town, several townsmen accost him with swords. Initially, Schmendrick says he’s a magician in need of food and rest. One of the men notes that magicians are supposed to have beards and that anyone can say he’s a magician these days. Still, the men welcome Schmendrick and Molly, not paying much mind to the unicorn. One of the men introduces himself as Drinn. He leads Schmendrick and Molly to an inn, saying he can provide them with food but may need Schmendrick’s help in return. 

By the time they reach the inn, many of the townspeople have followed the group with curious eyes and joined them at long tables in the dining hall. Drinn gives Molly and Schmendrick wine, which Schmendrick indulges in. Molly notices that everyone in the town is as old as Drinn, if not older, without any younger adults or children present. 

Drinn tells the tale of Hagsgate. The town was cursed by the same witch who built and cursed Haggard’s castle. The witch asked the town for payment when Haggard refused to pay her, but the town also refused, so she included them in her curse.