A borrowed item that was stolen – Who Gets What After Restitution?

Question:

I borrowed a $300 laptop from a friend. While under my care, it was stolen by someone working in my home. To make things right, I bought my friend a brand-new $300 laptop. [Fortunately, both he and I were able to retain all information from the old laptop, as it had been securely backed up in the cloud.] Subsequently, the individual who took the laptop was apprehended and agreed to return it, as well as provide restitution of $500 to compensate for the loss and potentially dissuade me from pursuing legal action (which I do not intend to pursue). My inquiry is: How should these items be distributed?

• Who keeps the original laptop? Does it still belongs to my friend.
• Who keeps the new laptop?
• Who keeps the Restitution money?

Answer:

The new laptop is to remain with your friend, as it was provided as compensation for the stolen device. The old laptop is now in your possession because the thief returned it after you had already addressed your friend’s loss. You retain the $500 restitution as reimbursement as once you have compensated the lender for their lost property, any subsequent external benefits arising from the stolen item are rightfully yours.

Explanation:

The law is clear that when a person borrows an item, they become legally responsible to return that item, even if it is lost or stolen. Therefore, since in this case the laptop was stolen, you had the obligation to reimburse your friend for the laptop—which you did correctly according to Jewish law.

Now, regarding what happens if the borrowed item is later found, we find a discussion among the Poskim about who keeps the old item versus the new one. Some argue that the original item belongs to its original owner, meaning the lender should take back the old laptop and you should keep the new one. [This practice is also standard within the field of civil law.] However, the prevailing opinion among the Poskim is that the moment you reimbursed the owner, you effectively acquired ownership of the borrowed item that was lost or stolen. Accordingly, the final conclusion is that the old laptop now belongs to you, the borrower, while the new laptop remains with the lender.

Regarding who keeps the restitution, the Shulchan Aruch rules that any profits or benefits arising from a borrowed item that was stolen or lost belong to the borrower—provided the borrower reimbursed the original owner. The only exception is benefits that come from the body of the item itself, such as if a borrowed cow was stolen and gave birth; in that case, the offspring belong to the original owner. However, external profits—such as restitution or, in Jewish law, the double payment a thief must pay—rightfully go to the borrower.

Accordingly, in this case, whatever restitution the robber decides to give belongs to you. In essence, you come out ahead: you now keep the old laptop (which effectively cost you $300 because you replaced it with a new one for your friend), and you also receive $500 in restitution. That means you end up with a laptop plus $200 in net gain.

Sources:

See regarding the liability of a borrower to cover stolen items: Michaber C.M. 340:1

See regarding who gets to keep the borrowed item that was now found: Shach C.M. 295:11 [brings dispute between Rambam and Tosafus, and concludes like Tosafus]

See regarding the borrower getting to keep the restitution: Michaber C.M. 295:1 regarding Pikadon, and Shach 295:3 that same applies to borrowed item