The next morning, Arabella asks Ravelli to return the real Beaugard painting they replaced for her, before the police arrive. But Ravelli can't find the original canvas. He suspects that the fish peddler, Chandler, stole it. In fact, all the copies of the painting, original and fakes, are missing or stolen. (The Professor has taken all three of the paintings.)

After being informed of the stolen painting, Spaulding dictates a business letter to his secretary Jamison that is addressed to his lawyers Hungadunga, Hungadunga, Hungadunga, Hungadunga and McCormack. He begins the dictation: "Gentlemen question mark. Harrumph," then clears his throat in the midst of it. Jamison asks: "Do you want that harrumph in the letter?" Spaulding replies: "No, put that in an envelope."

The dictated letter is a marvelous lampooning of legal terminology, filled with business correspondence jargon:

Now then, in re yours of the fifteenth, yours to hand and made to rep, brackets, that we have gone over the ground carefully and we seem to believe, i.e., to wit, e.g., in lieu, that, uh, despite all our precautionary measures which have been involved, uh, we seem to believe that it is hardly necessary for us to proceed unless we, uh, receive an ipso facto that is not negligible at this moment, quotes, unquotes and quotes. Uh. Hoping this finds you, I beg to remain...as of June 9, cordially yours. Regards.

Jamison objects, wanting to know where the letter finds him and is told to not be so inquisitive. When asked to read back the contents of the letter, Jamison leaves out everything he considers unimportant - which is almost everything except the heading and the salutation. He also leaves out one of the Hungadunga's from the law firm name.

Jamison: 'In care of Hungadunga, Hungadunga, Hungadunga, and McCormack...'
Spaulding: You've left out a Hungadunga! You've left out the main one, too. Thought you could slip one over on me, didn't you, eh? All right, leave it out and put in a windshield wiper instead. I tell you what you do, Jamison. I tell you what. Make it, uh, make it three windshield wipers and one Hungadunga. They won't all be there when the letter arrives, anyhow.
Jamison: 'Hungadunga, Hungadunga, Hungadunga...and McCormack.'
Spaulding: '...and McCormack.'
Jamison: 'Gentlemen, question mark.'
Spaulding: 'Gentlemen, Question Mark!!' Put it on the penultimate, not on the dipthonic. You want to brush up on your Greek, Jamison. Well, get a Greek and brush up on him!
Jamison: 'In re yours of the fifteenth.'
Spaulding: I see.
Jamison: Now, uh, you said a lot of things here that I didn't think were important, so I just omitted them.
Mrs. Rittenhouse: Well!...(Spaulding swings at his head and misses.) Whoa, Captain! Good gracious! Oh, my!
Spaulding: So...you just omitted them, eh? ...You just omitted the body of the letter, that's all. You've just left out the body of the letter, that's all! Yours not to reason why, Jamison! You've left out the body of the letter!...All right, send it that way and tell them the body'll follow.
Jamison: Do you want the body in brackets?
Spaulding: No, it will never get there in brackets. Put it in a box. Put it in a box and mark it 'fragilly'.
Jamison: Mark it what?
Spaulding: Mark it 'fragilly.' F - R - A - G...Look it up, Jamison. It's in the dictionary. Look under 'fragile'. Look under the table if you don't find it there.
Jamison: 'Quotes, unquotes, and quotes.'
Spaulding: That's three quotes?
Jamison: Yes, sir.
Spaulding: Add another quote and make it a gallon. How much is it a gallon, Jamison?
Jamison: 'Regards.'
Spaulding: 'Regards.' That's a fine letter, Jamison. That's an epic. That's dandy. Now I want you to make two carbon copies of that letter and throw the original away. And when you get through with that, throw the carbon copies away. Just send the stamp, airmail. That's all. You may go, Jamison. I may go too.

Police inspector Hennessey (Edward Metcalf) arrives. Spaulding sees an opportunity and introduces himself with an inverted title as "Captain Scotland of Spaulding Yard." He announces that he will help solve the case and brags to Mrs. Rittenhouse that: "This is no mystery. I could solve this in five minutes if I wanted to worry." He pretends to be personally insulted by a "dastardly" comment she makes and wishes that he "was back in the jungle where men are monkeys."

Hives spots the Professor sleeping under one of the paintings in the outdoor garden. (The other two paintings serve as a pillow.) To get the three paintings, Hives creeps up behind the Professor with ether to temporarily subdue him as Mrs. Whitehead distracts him by asking whether he likes anyone or has someone precious in his life. He nods positively and produces a photograph from his pocket of his loved one - a horse. The Professor is quickly revived when his blonde-haired object of pursuit awakens him - and the chase begins anew.

Meanwhile, Arabella has discovered from John that there is a second phony painting, so she still believes there is hope that John's facsimile will be recognized by Chandler as a quality piece of art. When she informs Spaulding of her knowledge, he brags that when he steps in to investigate cases, they are never solved: "You think it's a mystery now, wait 'til you see it tomorrow...That's me. Captain Yard of Scotland Spaulding. I always get my women or painting." John arrives to announce how the phony painting he found was stolen from his locked room. Spaulding suspects that the red-haired Professor is somehow to blame, just when the stolen canvas is returned. John believes that they'll have find a clue if they discover who painted this second painting. After numerous punning and joke-making, Spaulding mocks his own puns - while facing the camera:

Well, all the jokes can't be good! You've got to expect that once in a while.

He is thoroughly confused about the paintings and their authenticity, the evidence, and all the theft cases:

Spaulding: (inspecting the canvas) Say, this is signed Beaugard. There's the criminal, Beaugard.
Arabella: No, Beaugard is dead.
Spaulding: Beaugard is dead! Then it's MURDER! Now we've got something.

Ravelli and Spaulding discuss the stolen Beaugard and how to locate the thief. In another confrontational, non-sensical duel, they discuss searching everyone in the house for the painting - if it isn't there, they'll search the house next door, and if there isn't a house next door, they'll build one:

Spaulding: In a case like this, the first thing to do is to find the motive. Now what could have been the motive of the guys that swiped the Beaugard?
Ravelli: I got it. Robbery.
Spaulding: Would you mind going out and crossing the boulevard when the lights are against you?
Ravelli: ...I gotta-a an idea how to find-a this painting. In a case like this that is so mysterious, you gotta-a get-a the clues. You gotta-a use-a the Sherlock-a Holmes method...You say to yourself, 'What happened?' And the answer come back...'Something was stolen.' Then, you-a say to yourself, 'What was stolen?' And the answer come back: 'A painting.'
Spaulding: What are you, a ventriloquist?
Ravelli: Now you say to yourself, 'Where was this painting stolen?' And the answer come back: 'In this house.' Now so far, I'm-a right, eh?
Spaulding: Well, it's pretty hard to be wrong if you keep answering yourself all the time.
Ravelli: Now you go a little further and you say to yourself, 'Who stole the painting?' This is a very, very important question. Captain, if you got-a the answer, you got-a the solution to the whole thing.
Spaulding: Especially if you find the picture.
Ravelli: Now you take all-a the clues. You put 'em together. What do ya got, eh?
Spaulding: Bread pudding?
Ravelli: No. Here's what-a we got. Something was stolen. Stolen where? In-a this house. Stolen by who? 'Somebody in the house.' Now to find the painting, all you got to do is go to everybody in the house and ask 'em if they took it.
Spaulding: You know, I could rent you out as a decoy for duck hunters. You say you're gonna go to everybody in the house and ask them if they took the painting. Suppose nobody in the house took the painting?
Ravelli: Go to the house next door.
Spaulding: That's great. Suppose there isn't any house next door?
Ravelli: Well, then of course, we gotta build one.
Spaulding: Well now you're talkin'. What kind of a house do you think we ought to put up?
Ravelli: Well, I tell ya. Captain. You see, my idea of a house is something nice, and a-small, and comfortable.
Spaulding: That's the way I feel about it. I don't want anything elaborate. Just a little place that I can call home and tell the wife I won't be there for dinner.
Ravelli: I see, you just want a telephone booth...Now, what do you say, uh, what do you say, Captain, we build right about here.
Spaulding: Here?
Ravelli: Here, right about here (pointing to a spot on the table).
Spaulding: Oh, I'd like something over here if I could get it. I don't like Junior crossing the tracks on his way to the reform school. I don't like Junior at all, as a matter of fact.
Ravelli: All right, all right. We got something over there. And believe me, that's a-convenient. Oh, that's a-very convenient. Well look, all you gotta do is open the door, step outside, and there you are.
Spaulding: There you are?
Ravelli: Yeah.
Spaulding: There you are where?
Ravelli: Outside.
Spaulding: But suppose you want to get back in again?
Ravelli: You had no right to go out.
Spaulding: Well, don't do anything until I hear from you, will ya? Say, maybe that's the painting down in the cellar.
Ravelli: That's a-no cellar. That's the roof!
Spaulding: That's the roof down there?
Ravelli: Yeah, you see, we keep-a the roof in the basement, so when the rain come, the chimney don't get wet.

After more convoluted discussion about the non-existent house next door, an exasperated Spaulding reminds Ravelli about the object of their search:

Spaulding: Don't you remember, Mrs. Rittenhouse lost a valuable Beaugard oil painting worth a hundred thousand dollars? Don't you remember that?
Ravelli: No, I'm a stranger around here, I don't remember that.
Spaulding: Well, what do you think I am? One of the early settlers? Ravelli, don't you remember, Mrs. Beaugard lost a valuable Rittenhouse oil painting worth a hundred thousand dollars? Don't you remember that?
Ravelli: No! But I've seen you someplace before.
Spaulding: Well, that's where I was, but I'll stay out of there in the future.
Ravelli: Hey, Captain. It come to me like a flash! This painting wasn't stolen. Ha! You know what happened? This painting, Captain, disappeared, and yes, it disappeared. And you know what make it disappear? You'll never guess, Captain. What do you think-a make-a this painting disappear, huh? Moths! Moths eat it...Left-handed moths.
Spaulding: Go away. Go away. I'll be all right in a minute. Left-handed moths ate the painting, eh?
Ravelli: Yeah, it's a-my own solution.
Spaulding: I wish you were in it. Left-handed moths ate the painting. You know, I'd buy you a parachute if I thought it wouldn't open.
Ravelli: Hey, I got pair-a shoes. (Spaulding cringes)
Spaulding: Come on, let's go down and get the reward. We solved it, you solved it. The credit is all yours. The painting was eaten by a left-handed moth.
Ravelli: Hey, you know, we did a good day's work.
Spaulding: How do you feel - tired? Maybe you ought to lie down for a couple of years, eh? Why don't you just lie down so rigor mortis sets in. Look, Ravelli, I'll show ya how to get the painting. We'll go to court, and we'll get out a writ of habeas corpus.
Ravelli: You're gonna get rid-a what?
Spaulding: Oh, I should never have started that way, I can see that.

After finding the phony painting in John Parker's room (aided by a tip from Hives), Inspector Hennessey plans to arrest Parker. Chandler confirms the fact that: "The man who made that stole the Beaugard." To save her boyfriend from arrest and to protect his innocence, Arabella confesses that she stole the original Beaugard. Then John admits that he was the real thief. Hennessey is confused by the double confession and asks: "Who stole the painting?" The Professor steps forward to clarify and admits that he took the picture. He pulls John's facsimile from his coat, setting Arabella's tactics in motion - Chandler recognizes the skill in John's copy and at first calls it "The Beaugard." When the Professor pulls out the real Beaugard, and John's painting is compared to it, Chandler exclaims: "Only a master could have produced a painting like that," and offers John a commission to paint a portrait of himself. (John and Arabella are finally able to be married.)

Hennessey decides to let the criminal Professor go, but wishes to advise him first: "You're running around with the wrong kind of people. Do you want to be a crook?" The Professor silently nods and smiles. Hennessey suggests that he go home for a few nights to his mother.

In a classic surreal bit, the famous silverware-dropping routine, as Hennessey shakes the Professor's hand and continues his lecture, three knives fall out from the confines of the Professor's coat and noisily bounce on the floor. Then, more knives fall with a more vigorous shake. As the inspector continues shaking, more silverware spills out onto the floor, and soon the floor is littered with hundreds of pieces of silverware. Spaulding has experienced this before: "This may go on for years." He anticipates the last thing to drop: "I can't understand what's delaying that coffee pot," as a silver coffee pot finally tumbles out last.

The inspector is forced to arrest the Professor for the stolen property. To escape arrest, the Professor sprays the ether knockout substance from a Flit can over everyone. Spaulding is knocked out, but is left with his recalcitrant foot up in the air - it requires a second series of sprays. After everyone is laid out on the floor and fully subdued, the film concludes with the Professor knocking himself out next to the pretty blonde he has been chasing throughout the entire film.