"I have your daughter."
Translation:Ich habe Ihre Tochter.
Sie is formal for you but formal for your is Ihr(e) not Seine. Sein(e) is his or it's. Dein(e) is your (informal), Euer(m,n)/Eure(f) is your (when addressing two or more people), and Ihr(e) is your (formal). Like the You form of Sie you need to have a capital at the beginning of Ihr or Ihre if you don't it means hers or their. Hope it helps at least a bit
Formally addressing someone would use "Sie", which uses the possessive pronoun "Ihr". So that would then become "Ich habe ihre Tochter"= "I have your (with respect) daughter". "Seine" would referring specifically to a male whose daughter you have in your possession (which is weird to think about).