So many people having a go at the OP without reading the thread properly or really thinking about the situation. Let's look at the facts:
- OP had purchased, from what she says, a rather expensive coat and matching hat for her DD which clearly meant a lot. (This clearly wasn't a £1 job from poundland - but even if it was - that's not the point!).
- The hat went missing and for some considerable time, the OP repeatedly stated to MIL how sad and disappointed she was at the hat being missing as her DD could have still enjoyed the use of it.
- MIL was fully aware of which hat it was, what it looked like (she described it) and that OP was extremely keen to find it.
- Throughout that time, MIL knew exactly where the hat was, lied about it, and not only that, she had found the item and treated it as though it was her property to do with as she pleased ie. give it to another child. In law, this is theft: Intent to deprive the owner of their property, and, actively and KNOWINGLY doing so!
- MIL had numerous opportunities to "come clean" but made the CHOICE to repeat the lie and to continue to deprive the OP's DD of her property.
- Upon discovering the deceit and discussing it with MIL, OP's MIL ADMITTED that she had found the hat some time ago, and instead of calling up OP saying "I've found your DD's hat", made the CHOICE to keep quiet and decide that another child was more deserving of the item. MIL has openly admitted this and has shown absolutely no remorse for her actions.
It does not matter that it was "only a hat". Aside from the fact that the OP has made clear it was expensive and was part of a matching outfit for her DD, it actually does not matter whether it was a hat, iPad, or anything else. The item BELONGED to the OP's DD and therefore the MIL did not have the right to a) lie about finding it and b) give it to someone else when she CLEARLY knew who the hat belonged to and that the owner was keenly looking for it! She deliberately deprived the owner (the OP's DD) of the item of it's use.
The OP is not being unreasonable. Many people here seem to be missing the point that this hat belonged to a 4 year old child. By doing what she did, the MIL sends the message to BOTH her DGDs that if someone else has more than you and you think it's unfair, you simply decide that you are more deserving of the item and take it! Apply this exact principle in a wider context and it's fine then for me to see someone's Ferrari and decide that, notwithstanding the fact I cannot afford it, I am in fact more deserving, so I can just take it... and when the police come to arrest me, my defence will be that the owner should be more sensitive to the fact I'm more skint than them and shouldn't flash their Ferrari at me!
The OP has stood up for her DD and taught her that no, it's not okay for someone to steal from her and it's certainly not okay for her grandmother to steal from her, lie about it repeatedly, show no remorse, and actually blame her for having something nice!
This is not about "just a hat" - it's about the principle, the message it sends to the two children, and the simple fact that if it's not yours, you don't steal it and lie about it! To my mind if a child's grandmother is prepared to steal from that child, lie about it and show absolutely no remorse, I too would be questioning whether that was the sort of person I'd want looking after that child as it is demonstrative of the level of respect (or lack thereof) that the grandparent has for that child.