The titular white lie is told by Dorothy Kingsley (Bessie Barriscale) to her husband Gordon (Edward Coxen), who has just returned from a lengthy business trip, only to find a baby in his wife's arms. Dorothy tells Gordon that the baby is his, even though she and audience are aware that the child was sired by architect Frank Mason (Charles Mason). Dorothy's lie is thrown back in her face when Mason is hired to design the Kingsley's new house. In the course of events, Mason is murdered, and for a while it looks as if Dorothy has killed him to keep him quiet. But it is eventually revealed that Mason was an ex-criminal, and that he was "offed" by one of his former cronies. Unnerved by her experiences, Dorothy confesses all to Gordon, whereupon he reveals that he knew the truth all along. And lest anyone think that the heroine was unfaithful, it is further revealed that the child was merely adopted by Dorothy in Gordon's absence.
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