/LEE-guhl kuh-PASS-uh-tee too SOO/·procedural term
Also known as:capacity to sue
Written by attorneys — see sources below.
A procedural attribute of a party that authorizes it to initiate or defend a lawsuit in its own name under the governing law. The attribute attaches to any natural person or entity recognized as a legal person by applicable statute or common law. It is distinct from standing or the merits of the underlying claim.
See Our Sources· 6 primary sources
Statutes
Federal Rules
Uniform Acts
Restatements
How its tested
Common Examples
6
LLC Venue Based on Principal Place of Business
Lakewood Manufacturing, an LLC with its principal place of business in the Eastern District of State X, filed a contract action against a supplier. The supplier moved to transfer venue, claiming the LLC could sue only where its members reside. The court denied the motion because Lakewood possesses capacity to sue in its own name and therefore resides only in the district of its principal place of business for venue purposes.
LLC Sues Supplier in Own Name
Lunar Dynamics, an LLC formed under State A law, contracted with a parts supplier for manufacturing equipment. When the parts proved defective, Lunar Dynamics filed suit in its own name seeking damages. The supplier moved to dismiss, arguing only the LLC's members could sue. The court denied the motion, holding that the LLC holds statutory capacity to sue and be sued in its own name.
Limited Partnership Enforces Royalty Agreement
Lighthouse Shipping, a limited partnership formed to finance and operate vessels, entered a royalty agreement with a charterer. When the charterer underpaid, Lighthouse Shipping sued in the partnership name for an accounting. The charterer moved to dismiss for lack of capacity. The court denied the motion because the limited partnership possesses statutory capacity to sue in the name of the partnership.
Wife's Capacity to Sue Husband
Lillian Locke filed a negligence action against her husband after a car accident. The husband demurred, asserting that a spouse lacks capacity to sue the other. The court overruled the demurrer, holding that the wife possesses legal capacity to sue in her own name under state law.
White v. White618 P.2d 921 (Okla.1980)
In this personal injury action, plaintiff Marilyn S. White alleged that she was a passenger in a truck driven by defendant Robert W. White. They were traveling south on Interstate 35 near the city of Louisville, Texas, when the defendant lost control of his truck, overturning it and causing injury to her body.
The petition alleged that the plaintiff's injuries were caused by negligent acts of the defendant. He failed to keep a proper lookout for vehicles properly on the highway. He followed the vehicle in front of him too closely in violation of specific Texas statutes which were pleaded and attached. Robert White drove his vehicle into a space between the divided roadway and failed to keep his vehicle only upon the righthand roadway in violation of another specific Texas statute which was pleaded. He drove his vehicle at a speed that was greater than reasonable and prudent under the circumstances in violation of another specific Texas statute which was also pleaded and attached.
The plaintiff pleaded that as a result of said negligent actions she suffered broken bones and other injuries to the body resulting in permanent disability, medical expenses, and lost income with her damages totaling some $200,000.00.
The petition further alleged that at the time of the accident the defendants Robert W. White and Edward White were engaged in a joint venture or partnership operating a long-haul truck tractor-trailer. The plaintiff was employed by the defendants to help operate the truck. At the time of the accident she was within the scope of her employment. The defendants failed to carry Workmen’s Compensation Insurance, and that she has elected to proceed in the District Court.
Attached to the petition and made a part thereof was the Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance. The Corporation Commission of Oklahoma certified that Employers Casualty Corporation had issued to Edward White of Fort Cobb, Oklahoma an insurance policy covering the obligations imposed upon the insured by the Oklahoma Motor Vehicle provisions. Employers Casualty Corporation is not a party to this appeal because the cause against it was dismissed without prejudice by the plaintiff.
In response to the petition the defendants Robert W. White and Edward White filed special demurrers. They demurred to the petition on the grounds that the plaintiff has no legal capacity to sue and that the petition does not state facts sufficient to constitute a cause of action in favor of the plaintiff and against the defendants. In arguing that the demurrers should be sustained both Robert and Edward White argued that the plaintiff Marilyn S. White lacks the capacity to sue because she is the wife of Robert W. White and under the laws of Texas one spouse may not bring a personal injury action against the other. This fact does not appear on the face of the petition. The defendants also argued that in fact the plaintiff was not their employee but was a co-employer. They relied upon facts which do not appear upon the face of the petition.
The trial court sustained the demurrers to the petition and dismissed the case with prejudice. The plaintiff appealed, and the matter came before the Supreme Court of Oklahoma for review.
Federally Chartered Bank Sues in Federal Court
Loyal Insurance, a federally chartered entity, brought a collection action in federal court against a defaulting borrower. The borrower challenged jurisdiction, claiming the entity lacked capacity to sue in federal court. The court rejected the challenge, confirming that the entity's federal charter supplies capacity to sue in its own name.
Osborn v. Bank of the United States22 U.S. 738, 818–19 (1824)
In February 1819 the Ohio legislature enacted a statute imposing an annual tax of fifty thousand dollars on each office of discount and deposit maintained by any bank transacting business in the state without authorization under Ohio law. The statute authorized the state auditor to issue warrants for collection of the tax. Those warrants permitted entry into banking houses and seizure of money or goods to satisfy the levy.
The Bank of the United States filed a bill in equity in the circuit court for the district of Ohio at the September term 1819. The bill named Ralph Osborn, the state auditor, as defendant and sought an injunction to restrain enforcement of the tax statute against its operations. On September 14, 1819, the circuit court awarded a preliminary injunction upon the posting of a one hundred thousand dollar bond. Subpoena and injunction writs were served on Osborn and on John L. Harper, whom Osborn had employed to collect the tax.
On September 17, 1819, after service of the writs, Harper forcibly entered the Bank's office in Chillicothe and seized one hundred thousand dollars in specie and notes. The funds were delivered to H. M. Curry, then treasurer of Ohio. Curry held them separately until his resignation in early 1820, at which point the money passed to his successor, S. Sullivan. An amended bill added Curry, Sullivan, and Harper as defendants. It sought discovery, restoration of the funds, and further injunctive relief.
Curry answered admitting receipt of approximately ninety-eight thousand dollars from Harper. He credited the sum to the state but kept it separate. Sullivan, after initially failing to answer and being held in contempt, admitted finding the separate sum upon taking office and holding it untouched. The circuit court entered decrees against Osborn and Harper and directed restoration of the funds with interest on a portion of the specie. The defendants appealed the decree to the Supreme Court.
The Supreme Court requested argument on whether the Bank's charter conferred jurisdiction on the federal circuit courts and whether Congress possessed constitutional authority to grant such jurisdiction.
Union Sues Employer for Contract Breach
Liam Larson, a union representative, filed suit on behalf of Textile Workers Union of America against an employer for breach of a collective bargaining agreement. The employer moved to dismiss, arguing the union lacked capacity to sue in its own name. The court denied the motion, holding that the union possesses capacity to enforce its agreements through litigation.
Textile Workers Union of Am. v. Lincoln Mills of Ala.353 U.S. 448 (1957)
In 1953 the Textile Workers Union of America entered into a collective bargaining agreement with Lincoln Mills of Alabama. The agreement was to run for one year and from year to year thereafter unless terminated on specified notices. It contained a no-strike clause and established a multi-step grievance procedure whose final step, available to either party, was arbitration.
Several grievances concerning work loads and work assignments arose under the agreement. The union processed the grievances through every step of the contractual procedure, after which the employer denied them. The union then requested arbitration, but the employer refused.
The union filed suit in federal district court seeking an order compelling the employer to arbitrate the grievances. The district court held that it possessed jurisdiction and directed the employer to comply with the arbitration provisions of the agreement. On appeal the Court of Appeals reversed by a divided vote, concluding that the district court lacked authority under either federal or state law to grant the requested relief.
The Supreme Court granted certiorari. After the Court of Appeals decision but before oral argument, Lincoln Mills terminated its operations, ceased all work at the mill in March 1957, and contracted to sell its mill properties. Some of the grievances sought back pay for increased workloads, and the collective bargaining agreement authorized the arbitration board to adjust compensation retroactively.
5 common questions
Students Frequently Ask...
How does legal capacity to sue differ from standing?
Capacity concerns whether a party may appear in court in its own name under governing law. Standing concerns whether that party has a sufficient interest in the dispute to obtain relief. A party may have capacity yet lack standing, or vice versa.
Does loss of tax-exempt status destroy a nonprofit corporation's capacity to be sued?
No. Loss of tax-exempt status affects only regulatory classification. The corporation retains its legal existence and capacity to sue and be sued in its corporate name under state corporation statutes.
May a corporation be sued under a registered trade name rather than its formal charter name?
Yes. A corporation may be sued under the name by which it holds itself out to the public. Courts treat the trade name as identifying the same legal entity and permit amendment if needed to reflect the formal name.
Does an LLC's capacity to sue depend on every service contract naming the LLC?
No. Capacity arises from the LLC's statutory status as a separate legal person. Performance through contractors and execution of the primary agreement in the LLC's name suffice to establish that the LLC is carrying on its affairs.
When does a limited partnership have capacity to sue for misappropriation of intellectual property developed for its projects?
A limited partnership has capacity when the work falls within its stated purpose and the partnership used its resources. Ownership disputes with affiliates affect the merits, not the statutory capacity to sue in the partnership name.
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