One of the group restoring the estate is Dr. Ralph Greenway, a descendant of Cuthbert. And, as in all movies of this type, he happens to look exactly like Cuthbert (It's Abbott again, of course). Emily (the always spooky Gale Sondergaard) believes the estate is haunted, and the only way to fix it is to find the letter.
Horatio, of course, mistakes Ralph for his ancestor Cuthbert, and gets in a few licks (one of the few times Costello had the upper hand), and Ralph makes amends for his ancestor's misdeed of hiding the letter.
Costello is charming as Horatio. Lots of film comedians want to emulate Chaplin and go for pathos, and most fail. But Costello pulls it off. It helps that he is in such a dire situation (he wants throughout to meet up again with Nora in heaven), but you can really feel for his situation.
I also like Marjorie Reynolds as his fellow ghost Melody. They are the real team here, and you kind of wonder why Costello is still so enamored of Nora with Melody around.
Gale Sondergaard made a career of playing spooky and sinister women. The look of the witch in Disney's Snow White was based on her, and she was the first choice for the Wicked Witch in The Wizard of Oz, a role she turned down because she didn't feel she was right for the role (it would have been quite different). Here she added an air of creepiness to the entire surroundings.
Because of the nature of the plot, Abbott and Costello have few scenes together, and several of those involve Abbott interacting with a ghost (sometime with the ghost being invisible). This was evidently by design: the two men were feuding at the time and didn't want to be in the same room together if they could help it.
Because of its lack of belly laughs, and romantic plot (out of fashion these days), the movie tends to be overlooked. But it shows Costello in a different light, and has charm to spare.