Torch Quest/Spoiler

Go to the basement of the Rookgaard Academy. Once there, proceed north through two doors until you hit a wall with a lever nearby. If the wall is closed (no path through), pull the lever, as shown in the image.
Once the wall has opened, proceed again north through two more doors, kill the rat and open the chest box. If you have the capacity (5 oz.), it will appear in your backpack or your belt equipment slot.