The U.S. Court of Appeals agreed yesterday that the National Football League draft of college players in use for 41 years but modified two years ago, was illegal.

The ruling does not apply to the current draft procedure, which has never been challenged in the courts.

The three-member court, with one dissent in part, upheld the 1976 decision of U.S. District Court Judge William B. Bryant but rejected his award of $276,000 in damages to James (Yazoo) Smith, a former defensive back with the Washington Redskins who was injured in his rookie year in 1968.

The appellate court returned the case to the lower court for a further computation of damages to be paid to Smith, who contended in his 1970 suit against the Redskins and the NFL that the draft stifled the marketing of his football skills.

In his 1976 decision, Judge Bryant said the essence of the draft is an agreement among team owners "that the right to negotiate with each top-quality graduating college athlete will be allocated to one team, and that no other team will deal with that person."

Bryant called the arrangement an "outright, undisguised refusal to deal," and said it "constitutes a group boycott in its classic and most pernicous form, a device which has long been condemned."

In the appellate court opinion, Judge Malcolm R. Wilkey wrote that the draft, as it was held in 1968, was "undeniably anticompetitive both in its purpose and its effect."

Since Judge Bryant's decision, the NFL has signed a collective-bargaining agreement with the NFL Players Association that permits a draft of college players.

Only 12 rounds are now held as opposed to the 28 rounds previously.

The appeals court said Judge Bryant was correct in finding that the draft was significantly anticompetitive in its effect, forcing a player to deal with only one team, thus denying him bargaining power.

"The predictable effect of the draft, as the evidence established and as the District Court found, was to lower the salary levels of the best college players," wrote Wilkey."There can be no doubt that the effect of the draft as it existed in 1968 was to 'suppress or even destroy competition' in the market for players' services."