The Lord God had created all animals and had chosen the wolf to be his dog, but he had forgotten the goat. Then the Devil began to create as well, and he created goats with fine long tails.
When the goats went to pasture, their tails often got caught in the hedges. The Devil had to go and disentangle them, which was a great deal of trouble. This enraged him, and he went and bit off every goat's tail, leaving only a stump, as can be seen to this day. He then let them graze alone.
However, the Lord God saw that the goats were gnawing at fruitful trees, injuring noble vines, and destroying tender plants. Distressed by this, in his goodness and mercy, he summoned his wolves, who soon tore the goats to pieces.
When the Devil observed this, he went before the Lord and said, "Thy creatures have destroyed mine."
The Lord answered, "Why didst thou create things to do harm?"
The Devil said, "I was compelled to do it. Inasmuch as my thoughts run on evil, what I create can have no other nature, and thou must pay me heavy damages."
"I will pay thee as soon as the oak leaves fall," said the Lord. "Come then; thy money will be ready."
When the oak leaves had fallen, the Devil came to demand his payment. But the Lord said, "In the church of Constantinople stands a tall oak tree which still has all its leaves."
With raging curses, the Devil departed to find that oak. He wandered in the wilderness for six months before finding it. When he returned, all the other oaks had in the meantime covered themselves again with green leaves. Thus, he had to forfeit his indemnity.
In his rage, he put out the eyes of all the remaining goats and put his own eyes in instead.
This is why all goats have devil's eyes and bitten-off tails, and why the Devil likes to assume their shape.