Peter soon settles into his new home, but when Birgitta takes him out for a walk in the following spring, he is chased by a vicious bulldog, and escapes to a town alley where Elaka Måns (Mean Mike) lives.

At the town cats' spring ball, Måns organises a competition where contestants must answer a mental arithmetic question by showing the winning number with their tails.

However, when a fire breaks out in the house at night, Peter wakes and alerts the sleeping family with his frantic meowing, so he is redeemed as a hero, and Birgitta gives him a medal for his bravery.

When Måns learns of Peter's good deed, he dismisses his medal as worthless, and invents a new sports event called the Cat Championship, where the winning prize is a gold medallion.

Most of the town cats watch from safety in the trees, but a kitten named Fridolf has strayed onto some high scaffolding platforms, where he is attacked by the bulldog.