Back in Midge's apartment, Scottie asks her whether she knows any local authorities on San Francisco history. He's especially interested in people who know about unofficial history, urban legends.
Midge mentions Pop Liebel, and together she and Scottie go to visit Pop's bookstore downtown.
Scottie won't tell Midge what he's trying to find out, even though she's dying to know.
At Pop Liebel's, Scottie and Midge hear Carlotta's story: a rich and powerful man loved Carlotta but never married her. She bore his child, but he "threw her away," which drove her mad and led her to kill herself.
Scottie still won't tell Midge what's up, but she guesses his secret.