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Mayhem erupts when teenager Nancy Drew convinces the elderly Turnbull sisters to give their estate to a children's hospital. Under the provisions of their father's will, the sisters must live in the mansion for twenty years or the property will go to the city. Two weeks before the twenty-year term has elapsed, a gangster appears at the Drew house and demands the affidavits proving the sister's residency, but he is thwarted by Nancy's boyfriend, Ted Nickerson. Soon afterward, the Turnbull chauffeur, Phillips, is found dead, and the terrified sisters threaten to move out of their house. To allay their fears, Nancy fabricates a suicide note but recognizes Phillips as the gangster in search of the affidavits, leading her to suspect foul play. The sisters threaten to leave once again when a robbery occurs in their locked house, but Nancy persuades them to stay. Convinced that the robber entered through the basement, Nancy chides Ted into spending the night in the darkened cellar and sets up a camera to provide evidence of any intruders. That night, someone sneaks in and steals Ted's clothes, and when Nancy and Ted develop the negative the next day, they see a blurred figure moving toward the wall. The house seems lost to the hospital when Captain Tweedy arrests the sisters for Phillips' murder, but Nancy remains determined to find the real murderer. She and Ted discover a hidden doorway and tunnel leading to the house of Talbert, the Turnbull's neighbor, where they discover a plan for a racetrack that includes the Talbert and Turnbull house. Realizing that Talbert must have murdered Phillips to make certain that the sisters would lose their house and hence make his property lucrative for racetrack development, Nancy and Ted retreat to the tunnel, when they hear Talbert return. Tracing their muddy footprints, Talbert pursues them to the tunnel where they become trapped as the passageway begins to flood. In the ensuing scuffle, Nancy knocks Talbert unconscious with her shoe, and after the trio is rescued by the police, Talbert is arrested for murder.