Buyer canceled an order, then paid after I relisted it and sold it to someone else.

[littlerockshop]

I had someone agree to purchase an item, but they canceled before they paid for it. I agreed to the cancellation. An hour or so later, I relisted the item. Within a few hours someone else bought it through a buy it now listing. I shipped it out the next day. I thought all was fine. 

 Then three days later, the original person who canceled the order, somehow paid for it through paypal. How can they pay for something that is no longer listed for sale? What do I do now. I just want to make sure this isnt some sort of scam. Do I just go into paypal and refund their money? 

Thank you!