A federal jury deliberated for more than 18 hours over four days before finding convicted drug dealer Columbus "Little Nut" Daniels guilty yesterday of second-degree murder in the shooting death two years ago of rival drug dealer Brandon Terrell.

Daniels was charged with first-degree murder while armed. Conviction on the lesser charge indicates jurors were not convinced that Terrell's death was premeditated, and apparently felt the June 23, 1988 shooting in the street outside the Chapter III nightclub in Southeast Washington was an impulsive action.

Daniels, 20, who is facing a mandatory minimum sentence of 20 years to life on his March conviction for conspiracy to distribute cocaine, also faces a possible sentence of 20 years to life on the murder charge. He was also convicted on a misdemeanor charge of carrying a pistol without a license.

Daniels's attorney, Arthur M. Levin said, "We shall appeal."

Assistant U.S. Attorney David Schertler had argued during the U.S. District Court trial that Daniels shot Terrell at the direction of drug gang leader Rayful Edmond III after Terrell reneged on a drug debt to Edmond, challenged Edmond's authority over lucrative drug areas and insulted Edmond in front of hundreds of people.

Edmond, 25, is also charged with first-degree murder in Terrell's death, and is scheduled to go on trial on July 9. Daniels's conviction on the second-degree murder charge may foreshadow problems with the government's case against Edmond. Edmond, who has said he had nothing to do with Terrell's death, has pleaded not guilty.

One witness to the slaying testified that he heard Edmond threaten Terrell earlier in the evening inside the nightclub, and two others testified that shortly before the shots were fired, they saw Edmond nod to Daniels as if to instruct him to shoot Terrell.

None of the three witnesses was with the Edmond entourage at the club that night, and each saw varying parts of the night's events.

Edmond's brother, Robert Stewart, had been expected to give an insider's account of the slaying, but he refused to testify in the trial, telling U.S. District Judge Charles R. Richey that Daniels called and "intimidated" him after a list of prosecution witnesses was turned over to the defense.

It is not known if Stewart, who was given immunity from prosecution in exchange for agreeing to testify, will take the stand against his brother. If Stewart does not testify, he could face drug charges stemming from his participation in the Edmond operation.

Daniels, 20, showed no emotion as Richey read the verdict returned by the jury. The jurors, like those in two other earlier trials of Edmond and his associates on drug charges, served anonymously and were identified only by number.

Deputy U.S. marshals escorted the jurors from the courtroom and they were not made available to reporters, so there was no direct information about why their deliberations stretched over four days.

According to testimony at the trial, Terrell, 18, argued with Edmond and Daniels inside the club and then again outside as it was closing about 2:30 a.m.

Theodore Smith, 19, testified that during the second argument he heard Edmond tell Terrell he had "better not catch him around any of his areas or he {Terrell} was going to get 'done.' " Smith, who is now jailed on murder charges in an unrelated case, said he interpreted "done" to mean that Terrell would be killed.

After the exchange, Smith testified, Edmond and Terrell went back into the club, returning a few minutes later. Once back outside, Smith said, the two men had another encounter before Daniels asked an associate, Harry Sullivan Jr., to give him a gun. He said Daniels then used the gun to shoot Terrell.

Dr. Carol Lynn McMahon, deputy medical examiner, testified that Terrell suffered seven gunshot wounds -- three that could have occurred as Terrell threw up his hands and arms to protect himself and four in the back.

Prosecutors alleged that in payment for the killing, Edmond bought a $51,000 Mercedes-Benz for Daniels three weeks later.