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In 1634, in England, Sir Simon de Canterville agrees to take his wounded brother Anthony's place in a duel with the diminutive Sir Valentine Williams. The portly Simon demands that the duel be fought with lances, but to his horror, Sir Valentine also claims injury and sends his enormous cousin to the duel in his stead. After the first pass, a terrified Simon flees on his horse and hides in an alcove in the Canterville castle. Valentine pursues him there, but Simon's proud father, Lord Canterville, insists that his son would not tarnish the family name by hiding. As proof of Simon's courage, Lord Canterville agrees to have the alcove bricked up and, despite Simon's pleas, condemns him to die in the tomb and walk the castle's halls until a Canterville descendent commits a brave act while wearing Simon's signet ring. In 1943, the now-deserted Canterville castle, with its infamous ghost, Simon, is besieged by a platoon of American soldiers, who are to be billeted there. The castle's current owner, the precocious six-year-old Lady Jessica de Canterville, who lives nearby with her aunt, Mrs. Polverdine, greets the soldiers and tells them about the castle's haunting. The men, led by Sergeant Benson, are at first skeptical of Jessica's claims, but change their minds when Simon appears before them that night, moaning and striking ghastly poses. When one cocky soldier, Cuffy Williams, decides to scare the ghost back by chasing it in a sheet and gas mask, Simon disappears up a chimney. The next morning, the soldiers, exhausted from their previous night's activities, are reprimanded by their commander, Lt. John Kane, who refuses to believe their ghost tales. Seeing that Cuffy is limping, Kane orders him to clean the castle, while the rest of the platoon drills in the surrounding woods. Cuffy is soon joined by Jessica and insists on introducing her to Simon. After overcoming her fears, Jessica talks openly to Simon, who reveals his father's curse and bemoans his lonely entrapment, which has been prolonged because all of his descendents have been cowards. Jessica then notices that Cuffy has the Canterville birthmark on his neck and speculates that Cuffy is a Canterville and is brave enough to break the curse. That night, Jessica and Simon question a bemused Cuffy about his English ancestors and confirm their suspicions that he is a descendent of Simon's nephew. Simon then asks Cuffy, whom he calls "nephew," to wear his signet ring into battle, and Cuffy agrees. Later, at a party hosted by Mrs. Polverdine, Cuffy, who is proud of his newly discovered noble heritage, overhears some locals laughing about the Canterville family and questions Simon about it. Taking Cuffy to the castle's portrait gallery, Simon sadly explains that whenever one of his Canterville descendents faced a life-threatening situation, he would grow scared and run. Cuffy assures Simon that he will not let him down, and the following day, the platoon is called to duty. The platoon's assignment is to blow up a refinery on enemy soil, and Cuffy's job is to defend against German counterattacks. As Cuffy nervously awaits the explosion, Simon realizes that Cuffy forgot his ring and materializes with it on the battlefield. Cuffy accepts the ring just before the bomb blast and, while Simon watches from the bushes, joins his partner, Trigger, at a machine gun. After Trigger is killed by a German, Cuffy tries to take over the machine gun, but becomes paralyzed with fear and is replaced. Later, the platoon returns to Canterville castle, and Cuffy learns that he is being transferred. A depressed Cuffy then informs Jessica, who had been praying for his success, that he is a coward like all the other Cantervilles. As Jessica walks home in tears, however, she sees a parachute falling to the ground and runs to tell Cuffy and Simon. Jessica leads Cuffy to the parachute, which turns out to be carrying a large German bomb. Realizing that if the bomb explodes, the platoon, which is drilling in the woods, will be destroyed, Cuffy starts to attach it to his jeep. Once again, Cuffy becomes overwhelmed by fear, but overcomes his terror when an hysterical Jessica begins to kick the bomb. As Simon rides on top of it, Cuffy races the bomb away from the woods and jumps from his jeep just before it explodes into the castle. His brave deed finally accomplished, Simon thanks his "nephew" and "niece" and disappears into a peaceful eternity. Later, at Simon's newly constructed gravesite, Jessica confesses to Cuffy that she will soon be turning seven.