I'm still trying to follow this mess, but lets see if I can some this up a little:
At some point Butch contact Jim to make a stock for him. Jim agreed to the work so Butch mailed off the parts. However, Butch made an error in just mailing a rifle to someone without an FFL or that is a true gunsmith. Regardless, Jim accepted the rifle from the start.
Some point later Butch paid for the work, possibly to get things moving. Jim cashed the check, essentially binding him to finish the project.
Some time went by and Jim hasn't completed the job so Butch started pushing on him a little more. Jim then decides, at some point down the line, that Butch did something illegal by shipping him the rifle in first place. Even though Jim believes this to be illegal, he's made no attempt at contacting the authorities, rather he's just holding on to the rifle? Jim's even stated that he believes that sending the rifle was breach of contract which entitles him to damages. Even if it was a breach, it's up to the courts to decide and award damages in that situation. You can't just arbitrarily decide to award yourself damages.
So now we have Jim in possession of Butch's rifle, with no intent to return it, and he's also cashed check for payment of work that wasn't completed.
Butch's recourse was to contact BATF because Jim is now in possession of a stolen firearm and potentially operating a gunsmithing business without a license. Butch is hoping that the BATF will investigate this matter and recover the firearm.
I guess I don't understand why Butch didn't just get a lawyer and sue Jim from the beginning? Sure you might have to pay for a lawyer up front and some court costs, but the route that's currently going on is such a backwards long-shot and it might not even pan out like you want.
