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In turn-of-the-century Vienna, an American crashes a ball at the emperor's palace in pursuit of a beautiful Austrian countess, who rebuffs him. As members of the aristocracy look on, one tells the story of the countess and the American's recent love affair: Phonograph salesman Virgil H. Smith, an amateur drummer from New Jersey, hopes to sell his "talking machine" to Emperor Franz Joseph I, whose endorsement would persuade many Austrians to purchase the product. Before he can see the emperor, however, he is tossed out by palace guards who think his phonograph is a bomb. Meanwhile, in the emperor's chambers, the Countess Johanna Augusta Franziska von Stoltzenberg-Stolzenberg and her bankrupt father, Baron Holenia, are thrilled to hear that their black pedigreed poodle, "Scheherezade," has been chosen to mate with the emperor's own poodle. As they leave the palace, they encounter Virgil, whose fox terrier mutt "Buttons" sniffs Scheherezade and thus provokes both a bloody dogfight and a heated argument about class relations. The antagonists meet again in the Austrian Tyrol, where Virgil plans to ambush the emperor's hunting party in order to make his sales pitch. Johanna, angry after another scuffle between Buttons and Scheherezade, arranges to have Virgil deported. When Scheherezade suffers a nervous breakdown, however, the countess is forced to seek Virgil's aid. Scheherezade is then treated by a veterinarian who attended the University of Vienna with Sigmund Freud, and advises that the poodle should be made to confront Buttons in order to dispel her fear. When the dogs are brought together, both the animals and their owners begin to fall in love. In the next two weeks, during which Scheherezade is officially mated with the royal black poodle, Virgil, Johanna, and their pets share many secret rendezvous on a romantic island. Virgil gradually convinces a skeptical Johanna that their love can overcome class differences, and asks the emperor for her hand in marriage. The emperor, doubting that Johanna could remain happy living in Virgil's mother's Newark duplex, tells Virgil he will endorse the phonograph if Virgil gives up Johanna. Deciding that the emperor is right about their differences, Virgil breaks the engagement and tells Johanna he was only using her to gain the emperor's favor in the phonograph deal. On the night of the ball, Scheherezade gives birth to a litter of white puppies with black patches--clearly the offspring of Buttons. The countess' opportunistic father, fearful of losing royal favor, orders the puppies drowned and tells the emperor they were stillborn. Virgil, who has crashed the ball in order to make up with Johanna, rescues the puppies, shows them to the emperor, and defends the worthiness of himself and Buttons. The emperor agrees to let Virgil and Johanna marry if they will let him keep the puppies.