In 1780, the master tinker Horatio Prim, Lou Costello, arrives at the Kings Point estate of Tom Danbury, hoping to win Danbury's blessing to marry Nora O'Leary, a housemaid he has freed from indentured servitude with a letter of commendation from Gen. George Washington. Yet a scheming obstacle stands in his way: Danbury's devious butler, Cuthbert Greenway, Bud Abbott, who tries to block the young couple. Nora O'Leary, Ann Gillis, hurries to show the letter to Danbury, but she overhears him plotting Benedict Arnold's treason. In a tense moment, Danbury seizes Nora and hides the letter in a secret compartment within the mantel clock. Melody Allen, Marjorie Reynolds, Danbury's fiancée, watches from the window, witnesses the betrayal, and joins Horatio in a plan to ride off and warn General Washington's army. However, American troops arrive to arrest Danbury, overrun the estate, loot it, and set it ablaze. Melody and Horatio are mistakenly shot as traitors, and their bodies are cast into a well. Their souls are condemned to remain bound to the estate until their innocence can be proven.
For the next 166 years, the ghosts of Horatio and Melody wander the estate's grounds. In 1946, after the estate has been rebuilt and restored with many of its original furnishings, playwright Sheldon Gage invites his fiancée, June Prescott, Lynn Baggett, his Aunt Millie, and his psychiatrist, Dr. Ralph Greenway, Bud Abbott, a descendant of Cuthbert, to spend the weekend. They are greeted by Emily, the clairvoyant maid, Gale Sondergaard, who senses the grounds are haunted. Horatio and Melody have some playful fun with the new guests, especially teasing Dr. Greenway, whom Horatio initially mistakes for his old foe. The ghosts, even as they toy with modern inventions like the electric light and the radio, are drawn to a séance led by Emily. Through clues offered by Horatio and the repentant spirit of Melody—and with a growing sense of Tom’s own guilt—the newcomers begin to understand the truth: the letter exists, and it can set the trapped lovers free.
The hunt for Horatio’s letter continues, but the original mantel clock is currently housed in a New York museum. Greenway, seeking to make amends for his ancestor's misdeeds, travels to the museum to retrieve the letter. When museum officials refuse to let him examine the clock, Greenway takes matters into his own hands and steals it. He returns to the estate, where state police await him. They are unable to remove him from the grounds because of the same binding curse that holds Horatio and Melody. When the clock is finally opened and the letter revealed, Horatio and Melody’s innocence is proven, and they are released from the curse. Each is called to heaven by a loved one—Melody by Tom, Horatio by Nora—who meets him at heaven’s gate, only to glimpse a sign that reads, “Closed for Washington's Birthday.” Horatio must wait one more day to enter heaven, leaving a poignant reminder that some promises—like love and justice—can endure, even across centuries.
