U.S. District Court Judge Walter L. Nixon Jr. was convicted in Mississippi last night of two counts of lying to a federal grand jury about whether he attempted to derail a drug-smuggling case involving the son of a business acquaintance.

Nixon, 57, chief judge for the Southern District of Mississippi and a federal judge for 18 years, is the second federal judge to be convicted of a crime committed while on the bench.

The federal jury in Hattiesburg, which deliberated 14 1/2 hours, acquitted Nixon on a charge of accepting an illegal gift from the businessman, Wiley Fairchild, and on a third perjury count.

The Associated Press reported that Nixon wept as the verdicts were read, and his wife and daughters cried loudly. His lawyer pledged an appeal.

Defense attorney Michael Fawer said he was saddened by the mixed verdict, but added, "It's a verdict in which a man is absolved of any underlying wrongdoing." Nixon will not preside over any cases pending the appeal, but will not step down, Fawer said.

Prosecutor Reid Weingarten said, "Nobody is going to celebrate tonight in the Department of Justice with this verdict." He added, "We are satisified this case had to be brought and justice was done."

[Judge James H. Meredith set sentencing for March 31. Nixon, who faces up to 10 years in prison and a $20,000 fine, remains free on bond.]

The perjury counts arose from Nixon's denial to a Mississippi grand jury in July 1984 that he had discussed drug charges against Drew Fairchild with Fairchild's father or with Hattiesburg prosecutor Paul H. (Bud) Holmes. Both the elder Fairchild and Holmes testified that Nixon talked with them about the case and sought to "put in the good word" for Drew Fairchild.

Nixon maintained that he did nothing wrong and accused the two men who testified against him of lying to escape prosecution. Both Fairchild and Holmes arranged plea bargains in which they received reduced sentences or reduced charges in exchange for their testimony.

Nixon's conviction culminates an 18-month investigation involving him and his associates in the Hattiesburg area, which resulted in six indictments and six convictions for the Public Integrity Section of the Justice Department.

The Nixon case centered on two sets of events: an oil deal between Nixon and Wiley Fairchild and conversations months later among Nixon, Fairchild and Holmes about Drew Fairchild's drug case.

The government contended that Fairchild sold oil interests to Nixon for $9,500 as a favor for which he expected to be repaid. Fairchild, who pleaded guilty to giving the judge an illegal gift, testified that he made the deal because the judge "was an influential man." Regarding the value of the wells, Fairchild first testified that they were worth three times what the judge paid, then testified that the judge paid a "fair price." Nixon has made $62,000 from the investment.

The jury was told it could convict Nixon on the illegal gift charge only if it found both that he knew he was not paying a fair price for the wells and that he did something in his capacity as a federal judge in return.

Both Fairchild and Holmes testified that Nixon spoke to them briefly about the drug case. The younger Fairchild subsequently was sentenced to prison for state and federal drug offenses.