It all started when we were going through a premade adventure's flavor text and got to the bit when the party walked into the town of Night Falls. One PC, a paladin, used his class ability to detect evil before entering town. Well of course he was outside the gate so there was nothing. The party went in and flavor and plot ensued up to the point that a NPC, Harken, walked up to the party after being introduced. He is a Guildmaster and well known community member so I didn't think he would have statistics but he did and they showed his alignment to be NE. I alerted the Paladin that there was evil afoot and he instantly initiated combat with Harken, knocked him out, tied him up, and asked him a single question: What Did you do?
The PC assumed he had done something to earn his evil alignment like kill people or something. (He was a greedy man and a necromancer, although most of his spells prepared and in his spellbook weren't necromancy.) He technically was in league with the bad guy but they didn't know this.
In response he cried out, calling the Flesh Golem he was watching, and they killed it and him. In killing the necromancer who was so far helpful and polite to them I believe it violated the paladin's code in the class description (after a few days' thought on my part.) The excuse the player gave me was that his actions were sanctioned by the paladin's code. I don't agree by my reading of the code. So now that he has violated the code:
How do I break it to him that he has lost his powers without making the player think I am out to get him or being a mean GM?
To be honest, I was angry at the time. The local judge(added to the campaign.) is a cleric and has atonement and so the paladin will have a nearby chance to atone, possibly after doing some deeds for his deity.
The adventure I'm running is Lest Darkness Rise, available for free on the Wizards Web site.