Strange short circuit
 

The car is my '94 E320 wagon and when I lift the back hatch all the way the cabin light in the rear part goes out and the dash lights that control the seat heaters, snow tire chain light and rear window wipers become lit.
If I don't lift it all the way everything is normal. Where is the contact or electrical parts the control the light switch?

I'd bet you have broken wires between the body and the tailgate.

Additional info
 

Excellent! Thanks Kestas. I guess I'll have to peel back the rubber boots at the top of the hinges and inspect the wires on both sides. With the switch off there is no problem by the way. The lights stay off.