The story opens as the Spanish Ambassador to France moves into the house neighboring the boarding school in Paris.

The girls attending the school, including Madeline, watch the ambassador and his family move in with interest.

Pepito performs many antics that vex the schoolgirls, including shooting them with a slingshot, but whenever Ms. Clavel is present, he acts like a polite gentleman, earning her admiration much to the girls' chagrin.

Feeling dejected, Pepito changes his clothes into that of a Spanish Torero, assuming the girls will find that interesting.

Ms. Clavel decides that Pepito simply has pent up energy and needs a hobby to vent his feelings rather than pull pranks.

On a daily walk, she takes the girls to a toy store and buys a tool chest for Pepito to learn a trade.

The girls later encounter Pepito at a forested area, carrying a large sack which attracts a growing pack of dogs.

As Pepito goes to release the lions the girls panic, but Madeline stops him by telling him that he had nothing left to prove and that he is no longer a Bad Hat.