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This is the second version of "Daddy Long Legs" I have seen and the previous one I saw was the silent version with Mary Pickford...and it's one of her best movies. There' are also several other versions, including 1950s version with Fred Astaire and Leslie Caron, as well as "Curly Top" with Shirley Temple...though that version has changed the plot slightly to remove the romance between the benefactor and the orphan.
The story begins at a rather crappy orphanage. The mistress in charge (Elizabeth Patterson) is great at ordering the kids about but very short on love. When a rich donor, Jervis Pendleton (Warner Baxter) visits the place, he's not pleased with how much the place is like an institution and not a home for the kids. He also is impressed when he sees the oldest resident, Judy (Janet Gaynor), stand up to the other trustees and complain about their treatment...especially when being CONSTANTLY reminded how thankful the kids should all be for even the least little thing. Jervis is so impressed by her and sees great promise...so he decides to be Judy's secret benefactor. He's going to send her to college and help her out...without expecting her to also say how thankful she is for his help.
Time passes and something weird happens. Both Jervis AND Judy start to fall in love...something a tad creepy since he's so much older than her. Plus, she still doesn't know that this man is her benefactor. What happens when and if she does learn? See the movie and find out for yourself.
The problem with all the versions of this story (aside from "Curly Top") is that many will find the idea of an older man who is not just a father figure but a romantic one as well. This certainly is a valid concern...though the story still is well worth seeing.
By the way, the 'toddler' in the bed in the beginning of the film is 7 year-old Billy Barty. Barty specialized in playing toddlers because full grown he was only 3'9"...and that was at adulthood. He also played Mickey Rooney's baby brother in the Mickey McGuire films because of his size.