When I was in journalism school years ago one of my professors told this story:

A famous minister began his sermon: "As I was walking to church today, I saw a group of men gathered on a corner obviously much excited and preoccupied. They were watching two stray dogs viciously clawing and biting one another. `Why doesn't someone stop the fight?' I asked. And one of the men replied, `T'aint my dog.' Oh, how that cry has rung down through the ages. Then he delivered a beautiful discourse built on that theme. Afterward a parishioner caught him by the arm, saying, `Reverend, I doubt that story because I happen to know that you drove to church this morning.' Whereupon the minister replied, `My son, what difference does it make? I was making a larger point by using the fictional touch.' "My professor's thrust was that it is sometimes legitimate for those who instruct to hone their anecdotes to make stories more vivid and serve a larger truth. But I have always been bothered by that story, and have always considered it dangerous for writers, even for speakers, and, forgive me, dear professor, most especially for journalists.

- THAT STORY came flooding back to recollection last week when the press and TV revealed that the former LDS official Paul H. Dunn had substantially altered stories, or as he put it, sometimes "combined events, added emphasis, changed names" in his catalog of war and baseball reminiscences "to increase their teaching impact."

An editorial in the Daily Utah Chronicle last week was the most charitable assessment of the situation I have seen. "Paul H. Dunn is right. It is not uncommon for writers and speakers to alter names, places and details in a story to make a certain point or to leave a certain impression. The overall intent of his stories has never been questioned, only some details in a few of his thousands of anecdotes." It is also true that most widely circulated stories get warped in the telling.

Nonetheless, whatever its use in sermonizing, and whatever it gains in vividness, the willful creation or alteration of facts not only raises eyebrows but also destroys credibility when exposed.

Yes, President Reagan was prone to such excesses as passing off a fictional episode from a war movie as a factual anecdote, and the public always was ready to forgive him.

- BUT OTHERS DON'T FARE so well, especially when the fictional touch grows into the fictional sledgehammer, as it did for Rep. Douglas Stringfellow. Briefly our 2nd District congressman in the 1950s, Stringfellow, a genuine World War II hero, embellished his exploits in countless public appearances until the tales propelled him into office, then had to retire in disgrace when the press finally reported they were fabrications.In the early 1960s a movement called "The New Journalism" caught the fancy of some in the press. It was spearheaded by some celebrated writers. These included Truman Capote, who claimed to have invented, with "In Cold Blood," a new genre he called the "nonfiction novel." Other "new journalists" held that some dramatic license could improve the traditional and relatively dry factual reporting style, which, as they saw it, not only was less readable but also less truthful.

Consequently, they introduced fictional techniques such as combining characters into one illustrative person, creating dialogue, using "interior monologue" or telling what a character thought, and rearranging scenes. These techniques also are used, usually without attribution to sources, in some popular and nonscholarly fiction and biography. They are the method of some TV docudramas, which critics usually find are less docu than drama.

In 1984 the New Yorker magazine was involved in a new journalism scandal that illustrates the perils. It had to admit that one of its authors, Alistair Reid, had used composite characters, shuffled scenes and created dialogue way back in a 1965 story about comments by Spanish bar patrons listening to a televised speech by Generalissimo Francisco Franco. Reid wasn't at the bar; he watched the speech at a friend's home. He defended the fictionalized technique by saying he had disguised the locale to protect those criticizing Franco. But it was revealed that the bar wasn't even in existence at the time of the telecast.

The New Yorker got a black eye from the revelation. Of all magazines! It justifiably prides itself on the quality of its reportage and its passion for facts, leading readers to expect no less than total accuracy as far as it is humanly possible to deliver it.

- SOMEHOW ITS SYSTEM failed. The magazine has a team of "fact checkers" to verify every fact by whatever means are required and even to question problems of omission and interpretation. The New Yorker puffs that "our fact-checking department makes sure that, as far as possible, every word in every piece [including fiction and cartoonsT has been verified before the magazine goes to press. . . . Today most major magazines have fact-checking departments, but the New Yorker's is still referred to as `the legendary fact-checking department.' "

The Deseret News admonished its staffers after the New Yorker episode:

"News writers [mustT work for more interesting and compelling writing, but not at the expense of accuracy." It quoted a number of experts who felt the same way, among them one with this warning:

"Dishonest writing is bad writing, no matter how beautiful the style. We cannot tolerate self-indulgent overwriting, the creation of stereotypes, composite characters, improved quotations, rearranged facts, invented authorial presence or the omniscient looking into minds."- THAT BUSINESS OF INVENTED quotations is of particular concern in journalism these days.

A major libel case, now before the U.S. Supreme Court, pivots on the question of how far writers can go in manufacturing quotes.

It involves Jeffrey M. Masson, a critic of Freudian analysis, who brought suit against Janet Malcolm, author of the book "In the Freud Archives."

Masson says Malcolm made up quotes that were defamatory and attributed them to him. While the district court of appeals in San Francisco upheld an author's right to make "rational interpretation" of ambiguous statements, the case should alert writers once more that there are limits in toying with quotes.