During his trial for murder, in which headlines refer to him as "The Terror," Dr. John Redmayne denies that he poisoned four patients at his sanitarium, the Morgan Rest Home, but admits to one mercy killing. After Steve Scola, an attendant, gives damaging testimony, Redmayne pleads insanity on the advice of his lawyer, Daniel Burke, who promises to win an appeal, and is sent to the state sanitarium. During Redmayne's absence, Dr. Leonard Goodman takes credit for Redmayne's X-ray machine, which he had finished with the help of Franz Reinhardt, a drug addict. After six months, the state denies Burke's motion to reopen the case, and Redmayne fears that he is actually going crazy in the asylum. In a violent rage, he escapes in a rain storm to the Morgan Rest Home, where his sweetheart, Olga Morgan, lives. When Olga sees Redmayne at her window looking like a madman, Goodman orders the staff to search the grounds. Redmayne is mysteriously knocked out and placed in the cellar. Joe Hastings, Redmayne's reporter friend, calls the police and discovers that someone is deliberately trying to flood the cellar. He nearly discovers Redmayne, but is hit over the head. At dawn, Joe leads Inspector Bradley to the cellar, which is now flooded. The police then find Scola's body in the garage with a note signed "The Terror." The police drain the cellar, but find no other bodies. Burke, who sent jewel thieves Pudge Walker and Soapy McCoy to the sanitarium to hide, arrives and is strangled, after which another note from "The Terror" is found. Bradley then finds Redmayne, perfectly sane, hiding in his X-ray apparatus, where he appears as only a skeleton. Bradley hears gunshots upstairs and finds Reinhardt dead and Goodman with a flesh wound. Goodman tries to blame Redmayne for the shooting, but Bradley accuses Goodman of murdering the four patients as well as Scola and Burke, who were trying to blackmail him. Goodman also tried to drown Redmayne in the cellar. With the case solved, Olga asks Bradley if Redmayne looks insane, and Bradley says, "He's in love, isn't he?"
