In this moment, men will notice that someone is in the gravedigger's cottage. Go there and open door.
In the conversation with hiding kids you can mediate or frighten them. In both cases you receive Kurtz's address (Batty Street 8 or Batty Street, nearby a merchant), but frightening is required for a blackmail achievement.
Leave cemetery and after meeting prince Woodville go to the given address. Batty Street is a first cross street on the right, marching up on the main street.
Go to the very end, and open the last door with a key found in the chest from lovers' grave.
Inside, look at man's (Kurtz for sure) corpse. Notice a bandage on his right hand. Cut it open and you'll notice that man lost a part of his index finger (ignore a deduction board which appears at this moment).
Notice also a wounds on the left hand (dog's bite), left forearm, stomach and face.
Look also at his leg - there is another awful wound. Notice also a size of his foot (he has 9).
Examine also terribly crippled dog: his right front leg and two trunk's wounds.
Similar wounds you find on the dog on right, but on his left side and two limbs.
At sofa (on left) notice a piece of bloody newspaper.
Turn it around. Look at it. Holmes will deduce that it's yesterday's issue, and that it was wrapped around the meat which dogs ate. He will also notice remains of grapes.
Pay an attention on a empty bowls nearby sofa.
On the floor, opposite to the door, by the fallen chair, you see a tray. Check it.
Remark small burner, burned balls and weird smelling pipe. Holmes will say that man was smoking opium.