The story begins in a gloomy small town called Sombertown, which is ruled by the grouchy, ill-tempered, child-hating mayor known as Burgermeister Meisterburger. A baby arrives on his doorstep, with a name tag reading "Claus" and note requesting that Burgermeister raise the child as his own with love and care. However, Burgermeister angrily orders his right-hand man, Grimsby, to take the baby to the "Orphan Asylum." On the way there, a gust of wind blows both sled and baby far away from Grimsby, to the Mountains of the Whispering Winds. There, the animals hide him from the Winter Warlock, a powerful wizard who dislikes anyone trespassing on his land, before he comes investigating where the sled crashed.
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The animals then bring the baby to the other side of the mountain, to Rainbow River Valley, where he is found by an elf family by the name of Kringle, made up of five brothers led by their queen, Tanta Kringle. They adopt the baby and name him “Kris.