Charlie Chan and his number two son, Jimmy, along with chauffeur Birmingham Brown are all on a bus heading south to San Francisco during a rainy night to investigate a murder case involving an unidentified armless, legless, headless torso. A short time later, when the bus breaks down, the group takes refuge from the storm inside a bus station waiting room. Suddenly, a hand holding a gun reaches through an open window and shoots at Chan. The detective falls to the floor, apparently badly wounded. While Jimmy and others try to assist the unconscious detective, Chan recovers, discovering that he was saved by a pocket watch, now embedded with the assailant’s bullet, that was given to him as a birthday gift from his number two son.
Soon, several of the passengers find that they have been robbed. After they are joined by a U.S. Marine on leave named Jack Tillford, who is momentarily suspected of being the person who shot at Chan, the detective speaks privately to another passenger, Cosgrove. Chan suggests that he return the items that he has stolen, in exchange for not revealing his crime. “Goods returned, crime avoided,” suggests the detective. The grateful pickpocket promises to return the favor in the future.
Back on the bus, after the necessary repairs have been made, Chan learns that Mrs. Conover is traveling to San Francisco to search for her missing granddaughter, Mary. He tells the concerned woman that he will do what he can to help her find her missing loved one.
In San Francisco, Chan, Jimmy, and Birmingham visit the Bureau of Missing Persons, where the detective reveals to Captain Allen that he has two purposes: The first, on behalf of an insurance company, is to discover the identity of the torso; the second is to learn the whereabouts of Mary Conover. Chan suspects that the torso belongs to a former showgirl named Grace Gortner, whose wealthy husband, Homer B. Pendleton, had died after taking out a large insurance policy. On Allen’s desk, Chan sees a photograph of an AWOL (Away Without Leave) Marine, Corporal Joe Thompson, and realizes that he is the same person who had called himself “Tillford” at the bus station.
Chan returns to the hotel where Mrs. Conover is staying with her friend, Kate Johnston. After reassuring her that the body, which has an appendectomy scar, cannot be that of her missing granddaughter, he and Jimmy have lunch in the hotel restaurant. There, Chan recognizes their waitress as Mary Conover with dyed blonde hair. The detective leaves to bring Mary’s grandmother to confirm her identity, but while he is gone, Mary is also recognized by her former employer, Mike Rogan. Mary tries to sneak past Rogan and leaves the restaurant. However, Rogan, who is on a pay phone informing his boss of his discovery, hurries out to follow the young woman. Jimmy and Birmingham also follow, but, when Chan meets them at Mary’s apartment, they are joined by private detective Jeff Hay, who informs Chan that he has followed their bus driver, who is actually Mike Rogan, to this location. Inside the apartment, they discover Kate’s body, and Chan suspects that her killer had mistaken her for Mary Conover.
Chan returns to the Bureau of Missing Persons and learns that, before her marriage to Pendleton, Grace Gortner had once been in love with a man named Craig Winfield. Thompson, the AWOL Marine, is picked up by the police, and he explains that he went AWOL in order to try to find Mary, with whom he is in love. He adds that Mary had worked at an escort bureau and was frightened of her employer, Rogan.
When Chan returns to his hotel, Hay is waiting with the information that he has found Rogan in Chinatown. However, when they arrive there, they find that Rogan is dead. Mary is then picked up. She explains that Rogan had discovered that Thompson’s father was wealthy and had suggested to her that she marry John, take out a large insurance policy, and become a wealthy widow.
After reuniting Mary with her grandmother, Chan asks Mary to help him set a trap for the owner of the escort bureau. At the bureau, Mary is waylaid by Hay, but when he runs into a police trap, and learns that Mary is part of it, Hay returns with her to the escort bureau.
In the meantime, a photograph has come over the police wire service that identifies Hay as Winfield. Realizing that Mary is in great danger, Chan follows a hunch and finds Hay and Mary in Chinatown. Although Hay tries to shoot Chan, Cosgrove, the pickpocket, who had earlier “bumped into” Hay, had removed the bullets from Hay’s gun. Chan then explains that it was Hay who had killed Kate Johnson, having mistaken her for Mary. He was also the one who killed Rogan, in order to blame him for the other deaths, including the “Torso Murder.”