Ver en Cuevana. Lieutenant Malcolm, of the United States Army, arrives at the Casa Verdugo and reads the proclamation authorizing the occupation of Southern California by the United States government. The lieutenant orders all Mexican flags lowered and the United States emblems hoisted instead. Don Luis Verdugo, a feeble old Spanish grandee, unreconciled to the American occupation, refuses to allow the lowering of the Mexican flag. His daughter, Dona Maria, intercedes with the American officer, who temporarily allows the flag to wave. Struck with the brilliant beauty of the little senorita, the Union officer falls a slave to her charms and the attachment seems mutual. Don Luis, however, refuses to allow his daughter to receive the attentions of the American officer.