Facts
On 23 October 1973, the Schweizerische Bankverein (SBV) granted Mr. a loan of Fr. 17'000.--, secured by a pledge belonging to a third party, Frau S., with a value of Fr. 20'000.--. On 10 March 1975, the SBV increased the loan to Fr. 19'000.-- with Frau S.'s agreement. On 17 May 1979, Frau S. passed away, leaving her daughters E. and C. A. as heirs. As Mr. did not fulfill his obligations towards the SBV, the bank realized the pledge, which fully covered its claims. The A. sisters then asked Mr. to pay the balance he owed them after offsetting a claim against him, but Mr. refused. On 1 July 1981, the Cantonal Court of Nidwalden ruled in favor of the A. sisters, condemning Mr. to pay Fr. 9'199.65 with interest. On 1 April 1982, the Court of Appeal of the Canton of Nidwalden confirmed this judgment.
Considerations
The Federal Court dismissed Mr.'s appeal and confirmed the judgment of the Court of Appeal. The Court considered that, even if the legal relationships between the third party (Frau S.) and the debtor (Mr.) were not clearly defined, the pledgor (Frau S.) was subrogated to the rights of the creditor (the SBV) if the latter realized the pledge, in accordance with Article 110, ch. 1, of the Code of Obligations (CO).
The Court estimated that subrogation was possible even if the third party had not paid the debt to avoid the realization of the pledge, but simply because the pledge had been realized by the creditor. The Court also considered that, in case of doubt, the creditor's claim was transferred to the third party by subrogation, as if the latter had paid the debt.
The Court further considered that, in the absence of evidence of a waiver of claim or a liberal character on the part…