What do the boys witness after Dally calls?

Dally calls from a payphone, saying he's just robbed a grocery store and is running from the cops. As the gang rushes out of the house, Ponyboy feels as if he is about to faint.

They arrive at the vacant lot just as Dally does, from the opposite direction. The police pull up in their cars and jump out. Dally pulls his gun out and raises it; the policemen fire at him, killing him. Ponyboy realizes that Dally had wanted them to kill him. Dally has died "violent and young and desperate," but "he died gallant." Then Ponyboy does pass out.