Diego and Bernardo arrive in Monterey to see Senor Verdugo, but are robbed of what they have the first night in town. When Diego sees Verdugo, he tells him of this and the fact the robbers knew where Diego would be and that he might be carrying 17,000 Pesos for supplies from Spain to aid the people of Los Angeles. Bernardo is later taken prisoner and the crooks blackmail Diego for the 17,000 Pesos to get Bernardo back alive. Bernardo is rescued, then Diego learns that Verdugo's servant is behind the plot to steal the Pesos.; Don Rafael and Diego muse over the fact that Valencia is losing his garden bell because the Don is behind on his taxes, and it's the tax collector himself who wants the bell for himself. It seems the bell is supposed to be a protective charm for the community and will fight any attempt to take it. Zorro concocts a clever scheme to keep the bell from being taken away.