At the Rip Van Winkle Inn, it is evening (“On the Beach of Li-Li-Wee”). Eddie and Elsie Darling realize that there is no return boat or train until the next day. They get two separate rooms at the Inn. Eddie must use Percy's luggage since he left his own suitcase back in Poughkeepsie. He spills rice out of Percy's suitcase, and the drunken desk clerk thinks that the pair are married. This means they must register as husband and wife. Elsie convinces Eddie that he must destroy the register, since it could be used as evidence to request a divorce. Madame Matroppo enters and informs Eddie that Elsie Lilly and Dick are also staying at the Inn. The clerk guides Eddie and Elsie Darling to their rooms. Dick enters and expresses his confusion about Eddie's behavior towards his “wife” to Madame Matroppo (“If I Find the Girl”). Eddie leaves his room and secretly spills ink on the register to cover his name. Madame Matroppo is looking for her French admirer when she runs into the clerk who expresses his love for her (“The Triangle”). Eddie invites Elsie Darling for dinner downstairs, but she declines. Eddie meets Madame Matroppo at dinner but she refuses to sit with him and says he must go upstairs to dine with his "wife". Eddie laments his size and his low status (“When Your Collar Is No. 13 and Your Shoes No. 3”).