fixes #7854

compiler/sigmatch.nim

@@ -1921,6 +1921,7 @@ proc paramTypesMatchAux(m: var TCandidate, f, a: PType,
             result.typ.n = arg
             return
 
+  let oldInheritancePenalty = m.inheritancePenalty
   var r = typeRel(m, f, a)
 
   # This special typing rule for macros and templates is not documented
@@ -2002,7 +2003,7 @@ proc paramTypesMatchAux(m: var TCandidate, f, a: PType,
     if arg.typ == nil:
       result = arg
     elif skipTypes(arg.typ, abstractVar-{tyTypeDesc}).kind == tyTuple or
-         m.inheritancePenalty > 0:
+         m.inheritancePenalty > oldInheritancePenalty:
       result = implicitConv(nkHiddenSubConv, f, arg, m, c)
     elif arg.typ.isEmptyContainer:
       result = arg.copyTree

tests/generics/tgenerics_and_inheritance.nim

@@ -0,0 +1,36 @@
+
+# bug #7854
+
+type
+  Stream* = ref StreamObj
+  StreamObj* = object of RootObj
+
+  InhStream* = ref InhStreamObj
+  InhStreamObj* = object of Stream
+    f: string
+
+proc newInhStream*(f: string): InhStream =
+  new(result)
+  result.f = f
+
+var val: int
+let str = newInhStream("input_file.json")
+
+block:
+  # works:
+  proc load[T](data: var T, s: Stream) =
+    discard
+  load(val, str)
+
+block:
+  # works
+  proc load[T](s: Stream, data: T) =
+    discard
+  load(str, val)
+
+block:
+  # broken
+  proc load[T](s: Stream, data: var T) =
+    discard
+  load(str, val)
+