Shady Hollow is a small, peaceful village of woodland creatures deep in the northern forest. A river winds through town, feeding a millpond where Otto Sumpf, a quarrelsome toad, lives alone. At the far end of the pond stands the Von Beaverpelt Sawmill, the community’s economic engine, overseen by its owner, Reginald von Beaverpelt.

Beyond the mill, Shady Hollow’s streets are lined with shops, a police station, a bank, and Nevermore Books. The true social center of town is Joe’s Mug, a coffee shop run by a moose named Joe. Nearby, the Shady Hollow Herald serves as the town’s newspaper, its typical content running to spelling bee champions and peach cobbler recipes. The narrator acknowledges that darker forces are hidden in Shady Hollow, but they are about to come out.

At dawn one late August morning, Gladys Honeysuckle, a hummingbird and gossip columnist for the Shady Hollow Herald, flies her usual route into town. As she passes over the millpond, she notices an unfamiliar shape on the water. She circles lower and realizes she is looking at a dead toad floating belly-up: Otto Sumpf.

Though Otto was known for his bad temper, the sight of his body shocks her deeply.