diff --git a/activerecord/CHANGELOG b/activerecord/CHANGELOG
index ec1fd93ff5..7f1a1fcca4 100644
--- a/activerecord/CHANGELOG
+++ b/activerecord/CHANGELOG
@@ -1,5 +1,7 @@
 *SVN*
 
+* Fixed that SQLite3 exceptions are caught and reported properly #823 [yerejm]
+
 * Added that all types of after_find/after_initialized callbacks are triggered if the explicit implementation is present, not only the explicit implementation itself
 
 * Fixed that symbols can be used on attribute assignment, like page.emails.create(:subject => data.subject, :body => data.body)
diff --git a/activerecord/lib/active_record/connection_adapters/abstract_adapter.rb b/activerecord/lib/active_record/connection_adapters/abstract_adapter.rb
index cf7f07ba26..ac58b60e8d 100755
--- a/activerecord/lib/active_record/connection_adapters/abstract_adapter.rb
+++ b/activerecord/lib/active_record/connection_adapters/abstract_adapter.rb
@@ -405,7 +405,7 @@ module ActiveRecord
               log_info(sql, name, 0)
               nil
             end
-          rescue => e
+          rescue Exception => e
             log_info("#{e.message}: #{sql}", name, 0)
             raise ActiveRecord::StatementInvalid, "#{e.message}: #{sql}"
           end
@@ -453,4 +453,4 @@ module ActiveRecord
       end
     end
   end
-end
\ No newline at end of file
+end
diff --git a/activerecord/test/connections/native_sqlite/connection.rb b/activerecord/test/connections/native_sqlite/connection.rb
index e702006bc2..b686c7705b 100644
--- a/activerecord/test/connections/native_sqlite/connection.rb
+++ b/activerecord/test/connections/native_sqlite/connection.rb
@@ -13,7 +13,7 @@ sqlite_test_db2 = "#{BASE_DIR}/fixture_database_2.sqlite"
 def make_connection(clazz, db_file, db_definitions_file)
   unless File.exist?(db_file)
     puts "SQLite database not found at #{db_file}. Rebuilding it."
-    sqlite_command = "sqlite #{db_file} 'create table a (a integer); drop table a;'"
+    sqlite_command = %Q{sqlite #{db_file} "create table a (a integer); drop table a;"}
     puts "Executing '#{sqlite_command}'"
     raise SqliteError.new("Seems that there is no sqlite executable available") unless system(sqlite_command)
     clazz.establish_connection(
diff --git a/activerecord/test/connections/native_sqlite3/connection.rb b/activerecord/test/connections/native_sqlite3/connection.rb
index 640a2b97f5..07856cc677 100644
--- a/activerecord/test/connections/native_sqlite3/connection.rb
+++ b/activerecord/test/connections/native_sqlite3/connection.rb
@@ -13,7 +13,7 @@ sqlite_test_db2 = "#{BASE_DIR}/fixture_database_2.sqlite3"
 def make_connection(clazz, db_file, db_definitions_file)
   unless File.exist?(db_file)
     puts "SQLite3 database not found at #{db_file}. Rebuilding it."
-    sqlite_command = "sqlite3 #{db_file} 'create table a (a integer); drop table a;'"
+    sqlite_command = %Q{sqlite3 #{db_file} "create table a (a integer); drop table a;"}
     puts "Executing '#{sqlite_command}'"
     raise SqliteError.new("Seems that there is no sqlite3 executable available") unless system(sqlite_command)
     clazz.establish_connection(
diff --git a/activerecord/test/finder_test.rb b/activerecord/test/finder_test.rb
index 30b0b78313..a5eaca039e 100755
--- a/activerecord/test/finder_test.rb
+++ b/activerecord/test/finder_test.rb
@@ -233,6 +233,10 @@ class FinderTest < Test::Unit::TestCase
     assert_equal "Mary", topics[0].author_name
   end
 
+  def test_find_with_bad_sql
+    assert_raises(ActiveRecord::StatementInvalid) { Topic.find_by_sql "select 1 from badtable" }
+  end
+
   protected
     def bind(statement, *vars)
       if vars.first.is_a?(Hash)