The cleaners lost my suit and paid me for it. A week later I received a call that they found my suit and want me to take it back and return their money.

Q: Am I obligated to return the money and take back the suit?

A: It would seem that you are not obligated to take back the suit and return the money. The Gemara (B.M. 33b) teaches that if a custodian loses the object in his care and voluntarily pays the owner for the object, we look at it as though the owner conveyed ownership to the custodian when he initially deposited the object with him, even if the object increases in value and the custodian will profit from the arrangement (see Shach 295:11). However, it would seem that the custodian may choose what is in his best interest, since if the object deposited in his care decreases in value, he is not required to suffer a loss, and this is especially true regarding personal items that have little value to others (see Dibros Moshe, B.M. 41 [4]).

The main issue here is whether accepting payment for the suit is a binding transaction that cannot be reversed, or one that can be reversed once we realize that payment was made in error due to the erroneous assumption that the suit was lost, and therefore the owner must return the money and take back his suit.

The Gemara (B.M. 35a) rules that a custodian who loses earrings must pay the owner immediately and may not demand time to search for them (C.M. 291:7 with Shach 16). The Gemara relates that a custodian refused to pay for the earrings that he lost and Rav Nachman confiscated the custodian’s house as payment for those earrings. Ultimately, the earrings were found and had increased in value. Rav Nachman ruled that since his confiscation was done in error, the owner takes back his earrings and returns the house to the custodian. We see that a payment made in error is reversed and it does not matter whether the payment was made with money, real estate or some other object (Tur 295, cited by Rav Akiva Eiger 103:11 and Ohr Same’ach, She’eilah 8:3). Therefore, in your case, when your suit was found you must take it back and return the money to the cleaners.

However, some authorities contend that mistaken payment is limited to where the deposited item was ultimately found in the possession of the custodian. If the object was lost elsewhere and beis din obligated the custodian to pay for the lost object, there was no error when payment for the lost object was made and even if the object is subsequently found, the owner is not required to take it back (Tur cited by Sema 103:29). Although most authorities dispute this distinction (C.M. 103:11), it is difficult to force someone to give back either the object or the money if he does not wish to do so (See Taz, ibid.).

Morally, however, the owner should take back his object since the custodian, in your case the cleaners, will not be able to use the lost object if found, but you, the owner, can continue to use it as you did before depositing it with the custodian. However, all opinions agree that the cleaners cannot demand back the money if, by the time the suit was found, you had already purchased a replacement suit (Dibros Moshe, B.M. 41 [12]).