This is some kind of hostility bug that sometimes happens. If you do anything that can be considered hostile, then save first. I recently had this dealing with a trader NPC in a tavern that had killed his father. The father npc wanted his head. I had to stand outside the tavern's side door at an angle to teleport that NPC out of the tavern and at an area that no other NPC would see me handle some good old capitol punishment by the outhouses.
BTW I didn't drag and drop his body in an outhouse, I would never defile such a place with a coward like him!
