If one assumes a unity of the text, then Gen 35:16-20 makes it clear that Gen 35:26 cannot be referring to the sons born "to him [Jacob] in Paddan-Aram," since Benjamin was not.
So that means a different statement must be what is intended, and in fact, a preposition used there can allow for a different interpretation that fits the facts.
The Hebrew of the phrase in question is:
אֲשֶׁ֥ר יֻלַּד־ל֖וֹ בְּפַדַּ֥ן אֲרָֽם
The beth (בְּ) proposition in that construction, however, need not be taken to mean the sons were born in the location of Paddan-Aram (though that is a common use of the beth, so it is an understandable translation course to take). If context allowed it, that would be the most likely meaning. But again, context does not allow it. So what else could it mean? It could be (s.v. בְּ from respective lexicons):
- Instrumentality (BDB, III.2; HALOT, 16): "by means of" or in this case, since we are dealing with location, "by way of" Paddan-Aram
- Causal: (BDB, III.5; HALOT, 19): "through" or "on account of" Paddan-Aram.
Either idea would be making a statement not about the locality of where the sons were born, but rather a statement about where Jacob went that afforded him the opportunity to have this family; that is, the fact that by means of (or because of) Jacob going to Paddan-Aram, he found these wives/concubines and thus had these 12 sons born to him.*
Such implications with the preposition must come from the context to construe it so, and relaying that implication more directly in the translation would be something like this (with the implied thought in brackets):
who were born to Jacob by way of [his going to] Paddan-Aram.
Is such an implied thought valid? I believe so.
The context of this statement is right before Jacob finally meets up again with his father Isaac (v.27). Thus the summary statement of v.26 is the end of Jacob's journey away from home, a journey that started out by his leaving to go to Paddan-Aram to find a wife, per Gen 28:1-2 (NKJV):
1 Then Isaac called Jacob and blessed him, and charged him, and said to him: “You shall not take a wife from the daughters of Canaan. 2 Arise, go to Padan Aram, to the house of Bethuel your mother’s father; and take yourself a wife from there of the daughters of Laban your mother’s brother.
So now Jacob is returning to Isaac from his journey into the location of Paddan-Aram, but the focus is on account of his journeying to there, all these sons have been born to him, even Benjamin.
The inherent locative of beth used with a place name in Genesis 35:26 is setting up an emphasis within the context of Genesis 35 of Jacob's going there to Paddan-Aram as the means by which any and all of his sons were born to him, not the direct association of the sons necessarily being physically born at that location to him. His family came about by means of his going to Paddan-Aram, as his father Isaac had instructed him to do.
* A question in a comment below arose: "are there any other examples where a place name is the object of -ב and it is something other than locative?" The short answer is a qualified "yes."
For purposes here, an examination of Genesis was done; there are almost certainly other examples beyond, but this shows usages within the context of that work itself (which I believe is essentially a single authored work).
It should be noted that the use of beth with a place name always, by mere association to a place, has a level of "locative" idea behind it. But the context of certain usages adds a focus on that place association with respect to what that location affords by being an instrument or secondary cause toward another goal.
The examples below are from the NKJV; they are not exhaustive of all the ones in Genesis; they start with generic "places" then move to "named" places; the relevant terms translating the beth are bolded; in the discussion following the verses, ILI = 'inherent locative idea' in beth when associated to a place and EEM = 'extended emphasis of means' by context.
Genesis 9:13-16 (object is the place of a cloud)
13 I set My rainbow in the cloud, and it shall be for the sign of the covenant between Me and the earth. 14 It shall be, when I bring a cloud over the earth, that the rainbow shall be seen in the cloud; 15 and I will remember My covenant which is between Me and you and every living creature of all flesh; the waters shall never again become a flood to destroy all flesh. 16 The rainbow shall be in the cloud, and I will look on it to remember the everlasting covenant between God and every living creature of all flesh that is on the earth.”
A rainbow appears at the location of a cloud (ILI), but the focus is on the sign of that rainbow in a cloud as God's covenant with the earth regarding not ever destroying it again by means of rain/flood, and so the focus of the cloud is the means of bringing about the rainbow signification after a rain (EEM). For those that hold to divine inspiration of the text, then God is likely, through the human author, stating a side note about the fact that clouds really are the means of a rainbow forming, for clouds are "a visible mass of minute liquid droplets or frozen crystals," and a "rainbow is caused by light being refracted when entering a droplet of water, then reflected inside on the back of the droplet and refracted again when leaving it (accessed 10/10/2016)."
Genesis 25:23 (object is the place of a womb)
And the LORD said to her [Rebekah, mother of Jacob and Esau, Israelites and Edomites]: “Two nations are in your womb, Two peoples shall be separated from your body; One people shall be stronger than the other, And the older shall serve the younger.”
Two children (Jacob and Esau) are there in womb (ILI), but the focus is on her womb being the means of bringing about two nations (EEM).
Genesis 28:12 (object is the place of a ladder)
Then he [Jacob] dreamed, and behold, a ladder was set up on the earth, and its top reached to heaven; and there the angels of God were ascending and descending on it.
The angels were there on this ladder (INI), but the focus is on that ladder being the means of their "ascending and descending."
Genesis 31:18 (object is Paddan-Aram)
And he [Jacob] carried away all his livestock and all his possessions which he had gained, his acquired livestock which he had gained in Padan Aram, to go to his father Isaac in the land of Canaan.
It was there in Padan-Aram (INI) that was the means by which Jacob gained his possessions (EEM).
Genesis 34:10 (object is the land near Shechem)
So you [Jacob and his sons] shall dwell with us [the people of Shechem], and the land shall be before you. Dwell and trade in it, and acquire possessions for yourselves in it.”
There in the land (INI) would be the means of acquiring possessions (EEM), in a sense very similar to the 31:18 reference above, only for the sons in particular to gain.
Genesis 36:6 (object is land of Canaan)
Then Esau took his wives, his sons, his daughters, and all the persons of his household, his cattle and all his animals, and all his goods which he had gained in the land of Canaan, and went to a country away from the presence of his brother Jacob.
Like the previous two references, Canaan is the place where (INI) Esau had the means to gain his wives, children, servants, animals, and wealth (EEM).
Genesis 41:29 (object is land of Egypt)
Indeed seven years of great plenty will come throughout all the land of Egypt;
Egypt is the place where (INI) and means by which (EEM) a great harvest comes to help not only the land of Egypt, but others who will come to it for help (as Jacob's sons did).
Genesis 42:5 (object is land of Canaan)
And the sons of Israel went to buy grain among those who journeyed, for the famine was in the land of Canaan.
Canaan, that had been a blessing to Esau (as 36:6 above noted), was now where (INI) crops were not growing, so the land was the means of the famine (EEM).
Conclusion of Side Note
What the above examples indicate is that there is always some locative sense in beth used with a place, whether generic or specifically named, for a place is by definition a location.
These examples also show that places are emphasized as the means by which certain things can take place, but specifically things related to the obtaining of wives, children, and servants (since places contain people one can join with and acquire for such), obtaining of animals (since places were needed to raise the animals), and obtaining wealth and prosperity generally (since places were where crops are grown, metals mined, wood harvested, etc.). Further named examples along this line are Gen 46:6, 20, 34; 47:4, 6.
While gaining family and wealth through the means of places is the common reference in Genesis, anything a place might afford a means of can color the beth usage with an instrumental use, e.g. a location as a means of burial (Gen 49:29).
Given the nature of association of places with gaining of family, this lends further credibility to an instrumental emphasis in Genesis 35:26.