Pension Schöller.

Landowner Klapproth would love to have his nephew Alfred show him the inside of an insane asylum and meet real lunatics, promising to financially support him in starting a business. Alfred's friend Ernst Kissling recommends that he show his uncle the Schöller Guesthouse, whose guests are quite eccentric. Landowner Klapproth, who truly believes the guests to be lunatics, is thoroughly amused.