exn.sml

fun foo b =
   let exception Foo
   in if b
      then (foo (not b)) handle Foo => "caught"
      else raise Foo
   end

exception Bar
fun bar b =
    if b
    then (bar (not b)) handle bar => "caught"
    else raise Bar

Standard ML of New Jersey v110.76 [built: Sun Jul 14 09:59:19 2013]
- use "exn.sml";
[opening exn.sml]
val foo = fn : bool -> string
exception Bar
val bar = fn : bool -> string
val it = () : unit
- foo true;

uncaught exception Foo
  raised at: exn.sml:5.18-5.21
             exn.sml:4.48
- bar true;
val it = "caught" : string
-

(Something like: Each foo-call "creates" a new Foo exn-constructor, so the handle, that pattern matches value constructed with "inner" Foo against "outer" Foo-pattern, fails. And inner Foo carries on, uncaught.

Bar is created outside of bar, so each bar-call deals with same Bar and things behave more behavedly?)