In August of 1976, a 18-year old Dee Stewart announced to her shocked parents that she had decided not to go to college. Her mother, Ellen, was sure her daughter was making a terrible mistake. Her father, David, though realized that Dee was no longer a little girl and had to make her own decisions. One night, in September 1976, out driving in a heavy rainstorm, Dee swerved to avoid hitting a dog and struck a barricade, sending it flying into the air. It was not until the next morning, when her older sister Annie showed her the paper, that Dee found out the barricade had hit a car and put the driver in Memorial Hospital. Dee rushed to Memorial where her older half-brother, Dan, was taking care of the young man. His name was Beau Spencer and Dee kept a vigil at his bed, waiting to see if he would live or die. To Dee's great relief, he recovered, and although he didn't blame her for the accident, he initially ignored her overtures of friendship. Dee liked him anyway. He wasn't aware of it, but Dee took any interest by Beau to be flirtation and this gave her a new meaning in life. Soon, Dee she registered at college -- the same college Beau would be attending for graduate school.

When Annie met Beau, she had the opposite reaction from her sister's. She found him self-centered and cocky and thought Dee could do much better. Beau was definitely attracted to a Stewart, but it wasn't Dee, it was Annie! Annie sensed this and was afraid her sister would be hurt. Dee didn't make it any easier by wanting her two favorite people, Annie and Beau, to get along. Annie was determined to stay out of Beau's way and she shared her fears with her good friend Tom Hughes. Tom had an idea: If he told Beau that Tom and Annie were dating, maybe Beau would leave her alone. The plan didn't work, however, and one night Beau kissed Annie. He promised her they'd just be friends. Annie hoped he meant it, but she confessed to Tom that if it weren't for Dee, she might be pursuing Beau, too. When Beau figure out that Annie and Tom were just friends, he launched an all-out effort to win her. Ever since Beau kissed her, Annie realized she had deep feelings for him, but knowing how much Dee cared for him, and unwilling to hurt her little sister, Annie decided to transfer to another college, even though Beau told her the only reason he was hanging around Dee was so he could be near Annie.

By Christmastime 1976, Beau felt comfortable enough with Ellen to confide in her about his parents, Ron and Jane Spencer, who were wealthy but had a troubled marriage. Coincidentally, Dick Martin was the Spencers' attorney, and he learned from Ellen's grandfather, Judge Lowell, that Ron Spencer was the accused party in a paternity suit the Judge had presided over years ago, and he had lost. Out of concern for his great-granddaughters, the Judge ordered a background check on Beau.

In January 1977, a terrible accident rocked Oakdale. An entire wall of scaffolding collapsed at a construction site, burying Annie Stewart and Jay Stallings in the rubble. Jay was crushed trying to save Annie's life. Annie sustained a hairline fracture, while Jay was in serious condition with broken bones and internal bleeding. Bob Hughes was in charge of the case. While waiting for news of Annie, Beau confided to Tom that he felt responsible for her accident. He had just given Annie an ultimatum: either she tell Dee about her feelings for him, or he would. Beau was sure that was why she didn't hear Jay's warning.

The following month, Dee overheard Beau tell a still unconscious Annie how much he loved her. Beau told Annie that neither of them wanted to hurt Dee, but he knew he wouldn't be able to keep his feelings to himself much longer. A heartbroken Dee decided not to tell anyone what she overheard. Later,, when Annie regained consciousness, she confided in Tom that although she loved Beau deeply, she couldn't be with him because of Dee. Beau tried to convince Annie that denying their love was wrong, but Annie said she would rather hurt herself than hurt her younger sister, and she didn't think they should see each other anymore. However, Dee proved equally selfless and freed Beau and Annie to pursue a relationship, and in May, the two became engaged. Nevertheless, Dee still pined for Beau and finally grew so despondent that she told her father about the whole heartbreaking triangle. David was angry that Beau had played his two daughters against each other. He begged Annie not to keep seeing this young man, whom he considered unprincipled and selfish. In time, David came to realize Beau truly loved Annie, although he was still not completely sold on his son-in-law-to-be. The main problem Annie and Beau now faced was Beau's mounting debt. He had grown up privileged but was now enjoying his champagne tastes on a beer budget. Annie helped him get back on his feet by landing him a clerk job at Lowell, Hughes & Colman. Soon, Beau's mother, powerful businesswoman Jane Spencer, owner of the prestigious Spencer Hotel, came to town and offered Annie and Beau financial support. Beau was adamant about his mother not getting involved in their lives, and with Annie's approval, he turned down the offer. Then, in November, Annie learned the real reason Jane was in town. Beau's father had left her, and Jane didn't want to tell Beau because there'd been a long-standing feud between father and son.

In January 1978, when Beau failed his bar exam, Jane thought it was high time to call off his wedding to Annie, which was days away. How could he possibly support Annie on the meager salary he was making as a law clerk at Lowell, Hughes & Colman? Nothing was going to keep Beau from marrying Annie, though, and the wedding went off as planned, on Valentine's Day 1978. Jane offered the newlyweds the old Spencer house, but Annie was sure this was a ploy on her mother-in-law's part to gain control over their lives and she persuaded Beau to move into an apartment of their own. However, the apartment was beyond their means, and Beau was forced to turn to his mother for a loan. Jane was more than willing. Jane's antipathy toward Annie stemmed from the fact that although she was a Stewart, Annie was not the country club type. So, in May, Jane threw them "the party of the year" at the country club, of course, and gave them the gift of a membership to boot, Beau was right at home in this setting, but Annie wasn't and she decided it was time to go back to med school.

Meanwhile, Jane wooed Beau back to a junior management position with the Spencer Hotel. Annie was on to her, but Beau was not, and the situation began to cause friction between them. The pressure built as Beau continued to work at the hotel, clerk for the law firm and study for the bar. Jane laid it on Annie that Beau was only becoming a lawyer to make her happy. In August, when Beau failed the bar a second time, he was devastated. Conversely, Jane was thrilled, and she offered him full management of the Spencer so that he could support his wife in proper style. Beau had finally caught on to his mother's schemes, but he swallowed his pride and accepted her offer. He made his mother promise never to tell that he had only done this to support Annie. Observing from the sidelines was none other than Melinda Grey, Jane's new assistant. While Annie was busy at med school, the social climbing Melinda was ready, willing and able to help Beau in any way she could.

In the fall of 1978, Beau and Annie were fighting frequently and the truth eventually came out about his quitting law to support her. This was not what Annie had wanted, and she turned to her family for help. David and Judge Lowell agreed to lend Beau and Annie money so that Beau could pursue his law career. When Jane got wind of this, she threatened to sell the hotel if Beau quit working there. Beau gave in. He threw himself into his work, and Jane threw Beau and Melinda together whenever she could. Melinda fit Jane's country club image much more than Annie did. Soon, to Jane's delight, Beau's attitude toward Annie changed. By November, Beau was no longer supporting her dream of becoming a doctor and resented that, because of her studies, she couldn't be the proper corporate wife. Caught in the middle of trying to please her husband and pass her courses, Annie fell further and further behind. Dr. Jeff Ward, one of her resident doctors, took note. The week of Thanksgiving, the tensions finally exploded and Beau stormed out. Torn between marriage and work, Annie knew she couldn't have both. Aware of what was going on, Melinda was quick to make her move and easily seduced Beau at Christmastime.

Meanwhile, during the two years Jane had resided in Oakdale, Jane had become an influential member of the hospital board. However, the ubiquitous Dr. John Dixon managed to get a copy of Beau's birth certificate, which proved that Jane was not Beau's biological mother. John blackmailed Jane into agreeing to get John reinstated at the hospital -- she had no choice.

By January 1979, Melinda was growing curious as to what John Dixon had on Jane Spencer. Why would Jane get John reinstated at the hospital when she didn't even like him? Melinda offered to help John type his book. While she was at his home, she spied on John as he opened his safe. When John was gone, the observant Melinda found the combination and opened the safe. There it was, plain as day: Beau Spencer's birth certificate. His mother was one Rose Lang. Weeks later, Melinda went straight to Jane and dropped a bombshell: she was pregnant with Beau's child. If Jane didn't help her win Beau now, she'd tell him who his biological mother was. Again, Jane had no choice but to comply. Melinda told her half-sister, Barbara Ryan and her Aunt Kim about her pregnancy, and the family rallied around her. Melinda then told Annie who confronted Beau! She had given up her dream of becoming a doctor to be the wife Beau wanted, and this was her reward? As far as Annie was concerned, the marriage was over. With Melinda's threat hanging over her head, Jane worked on Beau to marry the mother of his unborn child, and he did in April. Melinda finally had the social status she craved, but Beau was still in love with Annie. To add to Melinda's troubles, John vowed to pay her back for using him to get the information on Beau. He'd see to it that her days as Beau's wife were numbered. When Melinda miscarried the baby, she was sure she'd lose Beau, too, but Beau was sympathetic.

Months later, Melinda confessed her dirty deeds—spying on John Dixon and Bob Hughes—to Beau but he couldn't find it in his heart to forgive her. When Beau later told his mother that Melinda had confessed everything, Jane thought Beau was talking about the adoption, and she apologized for never having told him. Beau was shocked and Jane had revealed her precious secret for nothing! Angry, Beau told his mother that he never wanted to see her again and he divorced Melinda. Determined to get the true story of his birth from his father, Beau left Oakdale for good and has not been seen since.