Malone that he has given up his former wild ways because of his love for "Rose-Marie". Black Eagle claims some land (and the gold on it) belonging to Jim and Herman. Herman thinks that shooting Black Eagle will solve everything, but Jim prefers to use legal means, declaring that he will visit Black Eagle and show him the boundary line the property map. Sergent Malone and "The Mounties" warn Herman that they will not hesitate to enforce the laws. Emile is going to take Rose-Marie with him to the trapping grounds at Kootenay Pass. He dislikes Jim and wants her to marry Hawley for financial security. Rose-Marie doesn't want to go, insisting to her brother that she is in love with Jim ("Lak Jeem"). Hawley plans to accompany Emile, but first he has to end his affair with Wanda. He plans to visit her at Black Eagle's log cabin and bribe her to stay away from him. Jim tells Rose-Marie that he will follow her to Kootenay Pass, and they will meet in an old house he calls a castle near a valley with a beautiful echo. According to legend, Indians would call down into the valley to the girls they wished to marry ("Indian Love Call"). Hawley meets Wanda at her cabin and tries to pay her off, just as Jim arrives with a map to prove his claim. Wanda sends Jim away. Black Eagle returns home and catches Wanda and Hawley embracing. He attacks Hawley, and Wanda stabs Black Eagle to save Hawley. Jim and Herman, unaware of the murder, follow Emile, Hawley, and Rose-Marie to Kootenay Pass. Jim and Rose-Marie communicate through their "Indian Love Call" (reprise). Emile tells Rose-Marie that she should marry Hawley because he could buy her all the "Pretty Things" she wants. Wanda arrives at Kootenay Pass and tells everyone that Jim is wanted for the murder of Black Eagle; his map was discovered near Black Eagle's body. Herman continues romancing Lady Jane ("Why Shouldn't We?"). Hawley proposes to Rose-Marie, but she refuses him. He and a city girl whom he has employed, Ethel Brander, try to impress Rose-Marie with the glamour of city life in Quebec. Wanda leads an Indian "Totem-Tom-Tom" dance. Jim has received an offer from the Brazilian government to lead a mining project there. He asks Rose-Marie to come with him, even though it would be safer for her