Gladys in Dernholm will tell you that she wants a ring that used to belong to her son.
Speak with Archibald by the dock and ask him about the ring. He is unwilling to hand it over to you.
Talk to his son Bernard (just outside the house-on the docks), he will tell you its some sort of game between the two. Glady sends someone looking for the ring every so often. The ring belongs to Gladys son, who gave it to Bernard sister. Hints to a possible romantic connection between the two.
Option 1: Pickpocket the ring from Archibald. Tell Glady he gave it to you. Then you'll receive 800 experience and some alignment.
Option 2: Kill Archibald and Bernard for the ring, Gladys will be very upset with you. No reward.
Option 3: Use Persuasion (at least 1+ point in skill) and talk to Bernard and Archibald to hand over the ring. Go back to Archibald and tell him you think Gladys is attracted to him, and he'll give you the ring. Then when you return it to Gladys you'll receive 1600 experience and a boost to your alignment.