I had never seen such a spring likewise prior to 113 ownership. It is much the same as Porsche using a leaf spring beneath the rear axle. Supposedly it helps resist vertical axle movement. I could be totally wrong about this and welcome a correction, but I believe the spring helps keep any camber changes to just the one wheel being effected by a bump or dip in the road. In other words, it works
like a camber compensator. I looked around and found this great picture on wikipedia which helps illustrate what happens if you do
not have this spring or something similar:
https://upload.wikimedia.org/wikipedia/commons/thumb/6/63/Swing_Axle_Diagram.svg/1920px-Swing_Axle_Diagram.svg.pngNote the rebound. I believe that is when the spring comes into play. You might notice that Pagodas dive quite a bit with the standard spring setup. By stiffening up the front suspension, I believe that significantly helps the rear maintain camber. I do not know why Mercedes did not utilize a De Dion tube in lieu of all this, as they certainly had experience with those on their race cars, except maybe owing to cost and complication, or perhaps sacrificing ride quality (but I have no experience with cars that use such a suspension setup, though I do want to buy an Iso Rivolta...).
I've found there's not a ton of information written about Mercedes' swing axle innovations at least in English on the internet. It's worth noting that post-Nader, I believe for a year, Chevrolet did use a similar compensator spring on the Corvair before going to a fully independent rear suspension. Mercedes should have offered such a suspension on our cars from the beginning, as Jaguar had done on the much cheaper XKE two years before the 113 was offered to the public...