From the description the flag appears to be a Mississippi State flag (CSA). A company flag (of this pattern) of an unknown Mississippi Confederate unit was captured at Boonesville, MS, May 30, 1862. Maybe this is a flag of the 3rd Mississippi.

(Copy & Paste) http://www.confederate-flags.org/confederate%20state%20flags-mississippi.html

Nice find, Thanks.

Happy Trails!
Tom Martin
www.Confederate-flags.org