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Dolan was already having financial problems with the Murphy & Dolan Company, which was on the verge of going bankrupt, and now with Tunstall's competition and gaining support from the locals and from cattle baron John Chisum, it was creating a huge threat to his struggling enterprise. Dolan lashed out by getting McSween arrested on phony embezzlement charges and having Jesse Evans and his gang steal horses from Tunstall's ranch. Tunstall struck back by exploiting Sheriff Brady for default in tax collecting in the editorial of the Independent .
Meanwhile, the Boys were getting a bit much even for the Kid, and at one point he separated himself from the gang and met some of the locals, such as the Jones family and two cousins, Frank and George Coe. The Kid's relationship with Jesse Evans was getting rocky and some members of the gang didn't like having a kid tagging along, particularly Bill Morton, who bullied and kicked the Kid out of camp one evening -as the story goes, the Kid was getting too friendly with Morton's girl. The Kid then bounced back and forth from the Boys and the Jones family, until he was arrested and charged with the theft of Tunstall's horses and thrown in the town jail, which was nothing more then a hole in the ground.
John Tunstall knew the Kid was a member of Evans's gang and after meeting the boy in confinement, instead of pressing charges, he offered the Kid employment. It was either out of pity or plans to use him as a witness against the rustlers (or a little of both). The Kid knew he was no longer welcomed by the gang and had nowhere else to go, so he took Tunstall up on his offer. The Kid was released from jail and hired on. The 17-year-old teenager hoped this was a new beginning for him, so he was now going by a new name, William H. Bonney.
This vagabond youth, who had no where to fit in since his mother's death, now finally found his niche. He was welcomed aboard and immediately clicked with his new friends. George Coe would later remember, "He was the center of interest everywhere he went, and though heavily armed, he seemed as gentlemanly as college-bred youth. He quickly became acquainted with everyone, and because of his humorous and pleasing personality grew to be a community favorite." George's cousin Frank, would also remember, "He was about seventeen, 5ft 8in, weight 138lbs and stood straight as an Indian, fine looking lad as ever I met. He was a lady's man and the Mexican girls were all crazy about him. He spoke their language well. He was a fine dancer, could go all their gaits and was one of them. He was a wonder, you would have been proud to know him."
Dolan was getting frustrated. He was doing everything he could to get rid of John Tunstall, from bad-mouthing him, threatening him (even pointing a gun in his face), rustling his livestock and had the sheriff levy his property for McSween's debts, who was just released from jail on bond, but it still wasn't driving the Englishman away. Tunstall knew his rights and it made him more determined to fight back, unfortunately, Tunstall's stubbornness and holding out would cost him dearly, including all of those around him.
On February 18, 1878, Sheriff Brady sent Deputy Bill Mathews and a posse to Tunstall's ranch to attach the cattle in the embezzlement case against McSween. Tunstall would allow them to take the cattle, but not his horses. So Tunstall, and a handful of his men herded the horses to Lincoln . Upon arriving at Tunstall's ranch, Deputy Mathews then formed a sub-posse led by Bill Morton to go after Tunstall and the horses. Among the posse, was Jesse Evans, Tom Hill, Frank Baker, and George Hindmann. Ironically, half the men who rode with the posse were members of the Boys and were wanted outlaws.
In the afternoon, the Tunstall group rode towards a canyon. The Kid and John Middleton rode drag about 300 yards behind pushing the horses, while Tunstall, Brewer, and Rob Widenmann led the way. A flock of wild turkeys got the attention of Brewer and Widenmann. Pulling out their rifles, they loped after them, leaving Tunstall alone. Suddenly, the Kid saw the posse galloping towards. While the Kid spurred his horse forward to warn Brewer and Widenmann, Middleton rode towards Tunstall and yelled out, "For God's sake, follow me!" as he and the others all headed for cover behind some rocks. "What John.what?" was Tunstall's last words.