Any time an individual, company, corporation or other entity decides that it wants to file a lawsuit against another individual or company, etc., the plaintiff must establish that it has the capacity as well as the right to sue. These are two separate legal concepts.
“Standing to sue” is defined as the one who has the right to relief in court. What this means is that the person who is suing the other person in court has a claim against that other person. A simple example would be where one person might be injured as a result of an automobile accident, but another person attempts to sue for those injuries. This other person clearly lacks standing to sue because he or she has no right to that relief in court.
The “capacity to sue,” however, is a different concept. “Capacity” is defined as the ability to sue. A minor may not have the capacity to sue. Some business examples of the capacity issue are corporations and businesses doing business under a different name. Corporations are granted authority of specific corporate powers given to them by the Secretary of State. Other entities operate under fictitious business names, i.e., Jim Jones doing business as ACME Construction. In order to have the capacity in court, you must be able to prove to the court that you are in fact a corporation, or alternatively, you are in fact the individual you say you are and that you are doing business under the fictitious business name that you have sued under. Failure to establish this capacity will keep you from either prosecuting your action or defending yourself if you are being sued.
“Capacity to sue” is much different than “standing to sue.” If an individual or business lacks standing, it more than likely will never be able to correct that lack of standing. However, lack of capacity often times can be corrected.
Common situations with regard to the lack of capacity come up in the area of corporations and fictitious business names. Corporations may have their corporate powers suspended for one reason or another and the likely reason is for failure to pay taxes. If a corporation filed a lawsuit, and its corporate powers have been suspended, it will be kept from prosecuting its action or defending itself.