On August 14, 1918, the day after torpedoing the tanker Frederick R. Kellogg, Kapitänleutnant Otto Dröscher and SMS U-177 attacked and sank the five masted schooner Dorothy B. Barrett about 20 miles off Cape May, New Jersey. According to the master, William Merritt, a shot was fired across his bows, but he did not see the enemy vessel the shot came from. As they made preparations to abandon the ship the U-boat surfaced and fired four more shots, apparently none hit the ship, the boat then submerged again. Shortly thereafter the boat surfaced about 100 yards distant, but did not fire or hail the crew. Captain Merritt surmised that the U-boat crew were waiting for them to get off the ship.

Captain Merritt stated that after they had taken to the lifeboat they attempted to approach the periscope of the enemy submarine, but "the Germans were apparently not anxious for us to approach, and really wanted us to get away", so the eleven men began to row toward shore.

The Navy sent out a couple of sub-chasers and a seaplane after hearing gunfire. When the aircraft approached, the schooner was ablaze and the submarine reportedly submerged. Depth charges were dropped, but no effect was seen, Dröscher got away again. The area was swept by a minesweeper later, as it was unknown whether the U-boat had laid mines in the area.

The survivors were picked up a few miles off shore, the crew were sent to land, but Captain Merritt went out to the area where his vessel was last seen on a destroyer. By the time they had arrived she had gone, Merritt and the destroyer returned to Cape May, another master without a ship, but all crewmen had survived their encounter.