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Faced with mortgage debts, Professor Nathaniel Billings (Boris Karloff) sells his 18th-century tavern to Winnie Layden (Jeff Donnell), who plans to turn it into a hotel. Billings stipulates as a condition of sale that he is able to continue working in a laboratory in the basement. His housekeeper Amelia Jones (Maude Eburne) and hired hand Ebenezer (George McKay) also continue to work in the inn. Layden is initially unaware of the nature of Billings's experiments in the basement laboratory: he is attempting to use electricity to create a race of superhumans to help the war effort. Layden's ex-husband Bill (Larry Parks) is against the sale, but is too late to stop it, and decides to stay on at the inn for a few days.One night at dinner, the residents hear the sounds of a ghost. Bill suspects that this is part of a plan to scare the new owner away. While investigating, Bill discovers in the basement the dead body of travelling salesman Johnson (Eddie Laughton), an experiment subject who died shortly after the sale. He reports this discovery to the local sheriff Dr Arthur Lorentz (Peter Lorre). After making inquiries, Lorentz realises the potential for profit and decides to work with Billings on a subsequent experiment. Their initial plan is to use Bill as a test subject, but this proves unsuccessful, so they turn their attention to Maxie, a visiting powder puff salesman (Maxie Rosenbloom).Before the experiments can begin, one of the inn's guests is murdered. Billings and Lorentz see the primary suspect as another guest, J. Gilbert Brampton (Don Beddoe), but the police officers who set out to investigate are intercepted on the way. Maxie scares away an intruder known as "Jo-Jo" (Frank Puglia), who is intending to steal Billings's equipment. Billings and Lorentz decide to begin their experiment on Maxie so that they can use him to stop "Jo-Jo" from blowing up a nearby munitions plant. Meanwhile, Brampton informs Winnie and Bill that he is visiting as a representative of the Historical Society of America, who are interested in buying the inn.When the police officers eventually arrive, they arrest the housekeeper and Ebenezer for the murders. The dead bodies come back to life, having apparently been in a state of suspended animation. The police officers decide to send the rest of the house's inhabitants to the Idlewild Sanatorium, a local psychiatric institution.