Soon after Emily's mother Gloria dies, Emily sends her new guardian (her mother's friend Jane Willoughby) a letter asking her to come to the Lilac Inn and look after her as Gloria had requested until she turns eighteen.
However, when Jane arrives, it soon becomes clear that she is in way over her head. Jane tries to be of assistance, but she's really no help at all. What's worse, Emily seems to be going crazy from all the stress and begins hearing voices and seeing pictures move by themselves.
What with one thing and another, Emily thinks it safest if she locks her mother's jewelry up in a safe and asks her acquaintance Nancy Drew to visit because Nancy's father is a lawyer and is bound to have at least one safe lying around.
As the girls talk, Jane suddenly shouts that they need to get out of the house; the kitchen's on fire. The firemen are able to put it out before the whole house goes up in flames, but the kitchen has suffered severe smoke damage and the oven is completely ruined. Without a kitchen, the Inn can't sell its signature pies and will have to shut down for months. Emily's woes are increased when she goes back upstairs to discover that her mother's jewelry has been stolen during all the confusion.
Emily starts to give in to despair and believes that she really is going crazy from stress. She ruefully tells Nancy that she wishes that their wealthy neighbor Josiah Crowley left her some money in his will like he promised, but when the will was finally found, everything went to his live-in "psychic teacher" Richard Topham. Josiah was like a grandfather to Emily and it breaks her heart that he seems to have ignored her in his will when she needs it most. Nancy suspects that the real will hasn't been found and the one that was is a forgery. She decides to look into the matter as she helps Emily with other things, such as speaking to her banker Jim Archer about insurance.
- Emily's father died in the Battle of Cantigny in World War I.