The setting is the medieval ages, vaguely European. No magic exists except what is explicitly stated in the question. The judicial system is similar to historic examples, with the head-of-state directly overseeing cases of sufficient magnitude to warrant his or her direct attention.
In this world there exists a small kingdom; three large cities and then the towns and communities that support it. One day the king receives a Truth Stone as a present.
Whenever someone holds this Truth Stone and (verbally) speaks the stone will use the holder's own mind to judge any intended deception. If he or she remains silent, the stone will not react at all.
- If the speaker is intentionally speaking falsehood or is intentionally misleading or misdirecting, the stone will glow red.
- If the speaker is intentionally speaking the truth, and is not intending to mislead or misdirect, the stone will glow blue.
- In any situation where the above two condition groups can't be determined from the holder's/speaker's point of view the stone will do nothing at all.
The stone does not account for cases of insanity, misunderstanding, or any other situation in which the speaker/holder believes themselves to be speaking truthfully but is in fact in error.
If he believes the world is flat and says it is round, the stone will glow red. If he believes the world is round and says it is flat, the stone will also grow red. If he believes himself to be a unicorn, and says that he's a unicorn, the stone will glow blue.
Further the stone divides phrases based on the speaker's views on the division of phrases. If somebody says: "I am a man, a carpenter, and have never eaten meat" the stone will probably evaluate each statement separately (going dark momentarily between each statement), but may not if the speaker sees that as a collective idea (such as if he was denying being part of the Guild of Female Carnivorous Stone Masons).
If a person was taught different meanings to terms, such as "guilty" meaning "innocent" the stone will evaluate it based on the speaker's/holder's understanding of the term.
To clarify: every reaction by the stone is based on the speaker's/holder's views on the statements that he or she just spoke, and has no direct dependence on the actual reality.
When there exists effectively a polygraph test that is as-perfect-as-possible (like the polygraph, targeting belief of truth) is injected into the legal system, and where the accused's belief of innocence can absolutely be determined, how would such as stone force the legal system to evolve, and how would it force criminal activity to evolve?