Merritt received word that an estimated eight hundred Cheyenne warriors had left Red Cloud's Agency to join the hostile "army" in the Powder River country that had been responsible for the Little Bighorn fiasco. In fact, it was a band of fewer than one hundred being led by Little Wolf, which may or may not have been the vanguard of a larger group. With Buffalo Bill Cody scouting for his column, Merritt laid a trap on Hat Creek in northwestern Nebraska, using a wagon train as bait. Merritt had three companies ready to pounce and infantrymen aboard the wagons. However, instead of taking the bait, seven of Little Wolf's warriors went for two mounted riders. Merritt did not want to disclose the location of three companies to chase seven individuals, so Cody suggested that he and a couple of scouts go after the seven warriors.
Cody reached the Cheyenne first and almost immediately found himself in a duel with Yellow Hand, who was riding in the lead of his party. It was another of those moments in the folklore of the West that seems so unreal as to have been created by Hollywood. Cody, who was an excellent marksman, shot Yellow Hand's horse out from under him, but at that moment, Cody's own horse stumbled and fell.
Suddenly the two armed warriors stood facing one another, man to man. Armed with a Winchester repeating rifle and clad in buckskins, Cody faced Yellow Hand, who was armed with a Colt revolver, and -if the stories are true-wearing an enormous headdress of the type that was so dearly loved by the costume managers of classic westerns. Cody got off two shots, killing Yellow Hand with the second. He then took out his knife and lifted Yellow Hand's scalp, declaring it the "First scalp for Custer."
The remaining Cheyenne scattered and the 5th Cavalry gave chase for a little while, but there were not further casualties on either side. Eventually, Little Wolf's band returned quietly to the reservation. The battle at Hat Creek, now known as Warbonnet Creek, was not yet over, however. In the coming weeks and years, it would be embellished as a legend and replayed thousands of times. Cody's "heroism" would soon be the subject of many dime novels-and even a stage production.