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In New York in 1780, Tom Danbury throws a ball in honor of his beautiful fiancée, Melody Allen, during which butler Cuthbert Greenways jealously watches the maid, Nora O'Leary, greet her beloved tinker, Horatio Prim. Nora discovers that although Horatio has failed to raise enough money to buy her out of indentured servitude, he has secured a letter of recommendation from George Washington, which will guarantee Melody's support of their marriage. Nora rushes to Tom's office in search of Melody, but hides in a closet when Tom and two Revolutionary officers enter. Cuthbert, meanwhile, locks Horatio in a trunk in the barn, determined to keep him from Nora. While standing outside the office window, Melody sees Tom and listens as he and the officers discuss their plans to surrender West Point and betray the revolutionists. Tom then discovers Nora with Horatio's letter and throws her to the soldiers. Melody, horrified, runs to the barn and disguises herself as a man, while Tom hides the letter in a secret compartment in his cuckoo clock. After Melody releases Horatio from the trunk, they race off to warn the Army of Tom's treachery. Revolutionary Maj. Andre Putnam, who is already on his way to arrest Tom, however, assumes they are traitors, kills them and curses their spirits to remain on the estate until they can be proven innocent. The next morning, the spirits of Melody and Horatio arise and realize they are cursed to haunt the manor for all time, with the letter from George Washington as the only proof of their innocence. Assuming that Tom has hidden the letter the house, they watch in sorrow as the soldiers burn down the manor. One hundred and sixty-five years later, the mansion's new owner, Sheldon "Shelly" Gage, brings his fiancée, June Prescott, and her friend, Mildred "Millie" Dean, to see how he has refurbished the manor with all its original furniture. Shelly's friend, psychiatrist Ralph Greenways, who is a descendent of Cuthbert, visits and explains the legend of the traitor ghosts who haunt the property. Ghost Horatio hears Ralph and, angered, decides to haunt them, but when he and Melody enter the new building, they find themselves frightened by such inventions as electric lights and the radio show The Phantom . Although everyone in the house is skeptical about the legend, Horatio's bumbling haunting soon convinces them the ghosts are real. Melody realizes that the letter may still be hidden in one of the pieces of furniture, but she cannot find it anywhere. Later that night, the group holds a seánce and housekeeper Emily summons the ghosts, who communicate by answering questions with raps on the table. As the group begins to understand the ghosts's plight, Tom's repentant spirit speaks through Emily and reveals the combination to the cuckoo clock's safe. After Shelly remembers that the cuckoo clock is only a replica of the original, which is in a Manhattan museum, Ralph visits the museum and steals the clock. He races back to the manor, where the police are waiting to arrest him, but Horatio and Melody haunt the police until they believe Shelly's story. The ghosts steal the police car and drive so wildly that the clock flies out of the car and the letter falls out. When the group reads the letter, the curse ends, and Horatio and Melody finally rise to heaven to meet Nora and Tom.