Facts
[S. AG] (Respondent) is a public limited company that conducts financing and provides related services. R. SA (Appellant) is a Geneva bank that became the legal successor of T. SA in 2001 through a merger.
On November 4, 1998, the Respondent opened an account with T. AG (later U. AG), into which an amount of DM 1.6 million was deposited. At the same time, the Respondent established a third-party pledge of up to DM 1 million on this account in favor of T. AG. This pledge served to secure a loan that the Appellant had granted to [D.] to support his company W. Limited in the purchase and digitization of a film library.
In December 2001, the Appellant terminated the loan to [D.] and realized the pledge by withdrawing EUR 511,291.88 from the Respondent's account. The Respondent then sued for the reimbursement of this amount.
Considerations
The Commercial Court upheld the claim, as it assumed that the Respondent had been in a material error within the meaning of Art. 24 para. 1 no. 4 of the Swiss Code of Obligations (OR) when concluding the pledge contract. The authority of W. Limited to dispose of the film library had been the necessary basis of the transaction and the third-party pledge for both parties. The Appellant had therefore realized the pledge without a valid contractual basis.
The Court of Cassation dismissed the Appellant's…