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IANAL, but I think under the circumstances he could not collect a judgement from you in court. Regardless of who actually stole the saw, it seems to me that his actions were tantamount to abandonment of his property. Another thing to consider is that when you hold someone else's property, it is called a "bailment". Because the bailment was for you and your customer's mutual benefit, you would be expected to take "ordinary care" of the property. This means that you should do whatever an ordinary person would do to protect the property. Was the saw in plain view in a unlocked vehicle? Where was the vehicle parked? If it was your own property, would you have left the saw where it was? I think you have nothing to lose by refusing to pay him for the saw. If he files suit, you can hand it over to your insurance company at that time. If you decide to pay him, I would certainly only compensate him for the depreciated value of the saw, minus the cost of repairs. I think you should also deduct storage for the days that you kept it after it was repaired. So if the saw was $500 new, then the depreciated value would be maybe $250 (after repairs); deduct repairs and storage, maybe you owe him 100 bucks. Maybe JohnT has something to add.
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