Languages that support both inheritance and nesting of declarations define method lookup to first climb up the inheritance hierarchy and then recurse up the lexical hierarchy. We discuss weaknesses of this approach, present alternatives, and illustrate a preferred semantics as implemented in Newspeak, a new language in the Smalltalk [GR83] family.
Gilad Bracha, On the Interaction of Method Lookup and Scope with Inheritance and Nesting (pdf)
... a standard example - a class representing points in the plane
Object Initialization and Construction Revisited