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Merrylegs is the third horse in the happy little Birtwick trio that includes Black Beauty and Ginger. They all share a stable, and of all the other horses in the book, Beauty thinks of them with the most affection. In the interest of full disclosure, we should probably acknowledge that Merrylegs isn't actually a horse—he's a little dapple-grey pony—but his personality more than makes up for his size. His job at Birtwick is to entertain the children of the estate, and he's more of a companion and pet than a working horse.
Right off the bat Beauty can tell that Merrylegs is straightforward and trustworthy. When they first meet, Merrylegs asks straight-out if Beauty bites, and then gives Beauty all the dirt on Ginger. Beauty calls him a "cheerful, plucky, good-tempered little fellow" who's a "favourite with every one" (5.24). He proves himself to be kind, reliable, and even-tempered, and takes it upon himself to teach poorly behaved children the proper way to treat a horse. As Merrylegs says:
"I am as careful of our young ladies as the master could be, and as for the little ones, it is I who teaches them to ride." (9.8)
He's intensely opposed to biting and kicking, and understands the consequences, as he explains to Beauty.
When the horses must all be sold, Squire Gordon finds Merrylegs a home with the local Vicar on the condition that the pony will never be sold again. Joe Green is hired to go with him, and Beauty feels that this bodes well for his little friend. Beauty never does find out what happens to Merrylegs after they leave Birtwick, but he always hopes for the best.