Gemara

(Beraisa): If Reuven told Shimon 'I lend to you a Tam ox', and really it was Mu'ad (and it damaged and Beis Din seized it), each pays half-damage.

Question: Reuven can say 'you are liable for allowing my animal to be taken to a place from where I cannot retrieve it. Had you returned it, I could have hidden it!'

Answer #1: That does not help for a Mu'ad.

Question: That answer is only if Reuven has other property Beis Din can collect from. If Reuven has no other property, what can we say?

Answer #2: Shimon can say, just like I owe you (the return of your animal), I owe the damagee (since you owe him), due to R. Noson's law (so you cannot blame me for letting Beis Din take it);

(Beraisa - R. Noson): "He will give to the one he sinned against" - if Reuven owes Shimon, and Shimon owes Levi, we take from Reuven to pay Levi.

Rishonim

Rif and Rosh (Kesuvos 6a and 2:9): If Reuven owes Shimon, and Shimon owes Levi, we take from Reuven to pay Levi.

Ran (DH l'Olam): R. Noson's law applies when Shimon has no other property to collect from, except for what Reuven owes him. If he has other property, Reuven's debt is like Meshubadim (property that a borrower sold), and we collect from Meshubadim only when the borrower has no Bnei Chorin (property that he did not sell). This is clear from Bava Kama 40b.

Beis Yosef (CM 86 DH v'Chosav ha'Ran): Sefer ha'Terumos and the Rashba (1122) agree. This is before the loan was due. If it was due, this is unlike collecting from Meshubadim.

Rebuttal (SMA 5 and Drishah 2): We do not collect from Meshubadim even after the loan is due! The Beis Yosef connotes that if Shimon has no property, Levi can collect from Reuven before the loan is due. This is unreasonable. The Ran explicitly says that Shibud d'R. Noson is after the loan is due!

Question (Gra 10): One cannot collect a Milveh Al Peh from Meshubadim. Even with a document, one may not collect Metaltelim from buyers!

Shach (5): The enactment not to collect Meshubadim when there are Bnei Chorin was to help buyers. Here, Reuven must pay in any case! The Ran equates this to Meshubadim when Reuven would lose if he must pay now. The Maharshal says that since R. Noson expounded a verse, his law applies even if Shimon has property, just Beis Din does not enforce it in this case. If Reuven seized from Levi, he need not return it. I say that since it is Torah law, Beis Din enforces it! R. Noson's words 'we take from...' connote that Beis Din takes it. It is difficult to say that they may, but they need not do so. If Shibud is mid'Oraisa, one may collect from buyers even if the borrower has Bnei Chorin. We enacted not to, for Tikun ha'Olam. Tikun ha'Olam does not apply here (Reuven must pay in any case)! We apply Shibud d'R. Noson in Pesachim and Kesuvos, without specifying that Shimon has no property. It is only mid'Rabanan not to. If Reuven would lose, e.g. Shimon admitted that the document was paid or Emanah or he pardoned him, if Shimon has other property Levi may not collect from Reuven.

Beis Yosef (DH v'Chosav Od): The Rashba (1122) says that if Ploni had money deposited with David, Beis Din seizes it to pay Ploni's creditor. This is even if Ploni wants to pay with land, for primarily, payment is with money.

Rambam (Hilchos Malveh 2:6): If Reuven owes 100 to Shimon, and Levi owes 100 to Reuven, we take from Levi and give to Shimon. Therefore, if Reuven had no property and he had a loan document against Levi, and Levi said that it was a document of Emanah or was paid up and Reuven agreed, we ignore his admission. Perhaps they scheme to uproot Shimon's collection rights. Rather, Shimon swears and collects from Levi, like anyone who is Toref (collects from one who bought from the borrower), who collects only with an oath.

Magid Mishneh: The Rambam holds that R. Noson's law applies only when Shimon has no other property. He learns from Bava Kama 40b.

Lechem Mishneh (DH Lefichach): The Gemara answered 'just like I owe you, I owe the damagee, due to R. Noson's law.' Perhaps this answers also the previous question, when the owner has property! We must say that since the Gemara did not say 'Ela', we do not retract from the previous answer.

Note: The previous answer was anonymous. The Gemara says Ela only when we retract from what an Amora said (Tosfos Shabbos 105 DH Ha).

Lechem Mishneh (second version): Perhaps the Rambam says that Reuven had no property to explain why Levi is not believed (his admission harms others), but Shibud d'R. Noson applies in any case! In Hilchos Shemitah (9:20), the Rambam connotes that Shibud d'R. Noson applies even when the borrower has other property! It seems that there is Shibud due to R. Noson's law, but we do not collect due to it, just like we collect from Meshubadim only when there are no Bnei Chorin (like the Ran said).

Shach (ibid.): The Rambam brings R. Noson's law Stam. He mentions that Reuven has no property in a case when Levi denies owing. Then, Levi can lose, so the enactment not to collect when the borrower has his own property applies. Many Poskim say that Shibud d'R. Noson is only when Reuven has no property, i.e. in a case when Levi will lose. The Maharshal says that even if Reuven has property, Shibud d'R. Noson prevents him from pardoning the debt. This is wrong. If he pardons, Levi would lose if he needed to pay Shimon, so the enactment not to collect from Levi applies!

Hagahos Ashri (Bava Kama 4:4, citing Or Zaru'a): Rabbeinu Yitzchak bar Yehudah says that R. Noson's law is only when Shimon has nothing to pay. My father says that it is even if he has what to pay.

Poskim

Shulchan Aruch (CM 86:1): If Shimon owes 100 to Reuven, and Levi owes 100 to Shimon, we take from Levi and give to Reuven.

Shulchan Aruch (2): This is when Shimon has no property to collect from; Beis Din decided what he is entitled to keep, and made him swear, and found nothing except for this debt (even if he has property in another land). If he has property in this land, Beis Din does not take from Levi to give to Reuven.

Source (Rivash 353, cited in Beis Yosef DH v'Chosav ha'Rivash): We do not force the lender to go to another land to collect. Therefore, it is as if the borrower has no other property.

Shach (5): If Levi wants to pay Reuven, he may do so (and exempt himself of his debt to Shimon) even if Shimon has property. This is not like paying a creditor without Da'as of the borrower.