Bava Kamma, Chapter 7, Mishnah 5. This Mishnah lists a variety of cases where a person stole an animal and sold or slaughtered it, yet is exempt from paying the fourfold or fivefold penalty - due to a technical flaw in his action.
Exemption due to a flaw in the sale or ownership:
"Mecharo chutz me'echad mime'ah shebo" - The thief sold the animal, but retained a small portion of the ownership for himself. The Mishnah specifies one percent, but the rule holds true even if he retained a much smaller fraction. The verse states, "And slaughters it or sells it," and since he did not sell all of it, he is exempt.
"O shehayah lo bo shutafus" - The animal he stole and sold or slaughtered partially belonged to him, as he and his partner were partners in the animal or the farm, and he stole his partner's share and sold or slaughtered it. Since a portion of the animal belongs to him, this is not a complete sale and not a complete slaughter, and therefore he is exempt.
Exemption due to an invalid slaughter:
The slaughter mentioned in the verse must be a valid slaughter. We must distinguish between these cases and the dispute mentioned earlier between Reish Lakish and the Sages: There, the slaughter itself is valid, but it is impossible to eat from the meat due to an external reason, such as non-sacred animals in the Temple courtyard. Here, however, we are dealing with an act that is not a valid slaughter at all:
"Hashocheit venivlah beyado" - He intended to slaughter properly, but did not follow the laws of slaughter, and the animal became a carcass in his hand.
"Hanocher" - There is a dispute regarding the definition of nechirah, as we have seen, but the point is that this is not a slaughter at all: He killed the animal in a completely different way, and some explain that he took a knife and cut from the nose down to the navel. This is not a valid slaughter, and it is not considered the "slaughter" mentioned in the verse, and therefore he is exempt from the fourfold or fivefold penalty.
"Hame'aker" - An expression of tearing out. He indeed kills the animal through the two signs, the trachea and the esophagus, whose severing is required for a valid slaughter, but he does not do so with a knife; rather, he tears them out with his hands. The animal indeed dies through the signs, but this is not a valid slaughter.
In all these cases, the act is not considered the "slaughter" mentioned in the verse, and therefore, "meshaleim tashlumei kefel ve'eino meshaleim tashlumei arba'ah vachamishah" - as a thief, he is obligated to pay the value of the theft and the double penalty, but he is exempt from the fourfold or fivefold penalty that he would have paid for slaughtering a sheep or an ox.
Exemption because an act of theft was not committed:
The next part of the Mishnah deals with a different type of technical issue: In order for all these laws to apply, the person must be a thief from a halachic perspective. Theft requires an act of acquisition, just as a person acquires objects in other ways. There are two primary acts of acquisition for an animal:
Hagbahah: Lifting the animal. This acquisition takes effect even within the owner's domain - one who breaks into his friend's courtyard and lifts his goat becomes a thief immediately, since lifting is an act that effects a transfer of ownership.
Meshichah: Leading or pulling the animal. Pulling is not effective as an act of acquisition within the original owner's domain, but only in a neutral area, such as an alleyway or the public domain. Therefore, one who pulls the animal within the owner's courtyard, even if his intention is to steal, has not committed an act of theft; only from the moment he takes it out and pulls it outside the courtyard, to the street or sidewalk, is the act of theft completed.
From this it follows that if the sale or the slaughter preceded the act of acquisition, the animal was not stolen from a halachic perspective, and the fourfold and fivefold penalties will not apply, nor will the double penalty.
The Mishnah lists three cases where he is liable:
"Ganav birshut habaelim... vetavach umachar chutz mirshutam" - The thief entered the owner's domain, pulled the animal, and took it outside their domain. The pulling outside the domain is what completed the theft, and once he slaughtered or sold it there, he is liable.
"O sheganav chutz mirshutam... vetavach umachar birshutam" - He saw the sheep wandering in the street, after it had jumped over the fence, and he pulled it with the intent to steal, not in the owner's domain. Through this, he became a thief. And even if he subsequently led the animal back into the original owners' property and sold it there - putting up a sign and offering it for sale as if it were his own, or if he slaughtered it - he is liable, since he became a thief at the moment he pulled it outside the owner's domain.
"O sheganav vetavach umachar chutz mirshutam" - Everything occurred outside the domain: he saw his neighbor's goat that had left the house and took it for himself, and the very act of taking it outside the domain is the act of theft, and subsequently he slaughtered or sold it while it was still outside the domain.
In all these cases, "meshalem tashlumei arba'ah vachamishah" - not only does he pay the double payment for being a thief, but after he slaughtered or sold his stolen item, he is also liable for the fourfold or fivefold payment.
"Aval ganav vetavach umachar birshutam - patur" - But if he stole, slaughtered, and sold within their domain, he is exempt:
One who breaks into his neighbor's courtyard and does not take the animal out of the courtyard, nor does he lift it to acquire it through lifting, but rather leads it or drags it solely within the owners' domain, and while still in their property he slaughtered and sold - he slaughtered it there and sold its meat, or he put up a sign and sold the cow, goat, or sheep to someone who thought the animal was his and from his farm - he never took the animal out of the property until after he sold it, and therefore he never became a thief at all, and is completely exempt.
It turns out that this person is not liable for fourfold and fivefold payments, nor even for double payment, since he did not steal. His entire liability is solely based on the law of a damager: one who jumps into his friend's courtyard and kills his animal is liable for damage payments, and therefore he must return the value of the animal - and that is his only liability. And if he processed its meat, he is even permitted to keep the meat.
In summary: This Mishnah listed cases in which the thief is exempt from fourfold and fivefold payments. First, due to a deficiency in the act of sale or in ownership - one who retains a portion of the animal for himself or one who was a partner in it. Then, due to a flaw in the slaughtering - one who slaughters and it becomes a nevelah in his hand, one who stabs, and one who tears, as their actions are not included in "slaughter" mentioned in the verse, and therefore they pay only double. Finally, because the act of theft was not completed: since pulling does not acquire within the owner's domain, one who stole, slaughtered, and sold entirely within their domain is completely exempt, and is only liable for damage payments as a damager.