Reuven bought an item from Shimon for $1000, but Shimon defrauded him and the item was worthless. Reuven did not know that he was duped and sold the item to Levi. Is Reuven chayav to refund to Levi or could he claim that he had no idea that he was duped by shimon and he is an Ones?
Shalom, K’vod Harav!
Shulchan Aruch (Choshen Mishpot 232:18) quotes the Rambam, that if the seller was merely a trader who buys from one and sells to another, and thus was unaware of the defect in the merchandise, he need not return the money to the buyer (since the buyer should have checked for defects before buying).
However, the Remo”h rules that even if the seller was unaware of the defect, he must return the money. (Mekach To’us is not a fine upon the seller, but a right of the buyer not to accept defective merchandise.)
Note the Gr”a (ibid note 27), that if the defect was not discernable at all, and the buyer was not negligent in not checking for defects (e.g. the animal sold had an internal defect such as a treifoh in the lungs), even the Rambam would agree that the seller must return the money. Aruch Hashulchan (232:27) comes to the same conclusion.