IIRC that was the Awa Maru incident. She was sunk by the
Queenfish.
The CO was court-martialled & relieved of command, although his superiors felt that he did not deliberately set out to sink the ship.
What happened was that the sub made radar contact with the Awa Maru, at night and in bad fog. From the radar return the CO believed it was a Jap destroyer, and fired using range & bearing data from radar, i.e. no visual contact.
The ship, although carrying Red Cross supplies for Allied POWs, was also carrying ammunition and other war materiel, since the ship blew up spectacularly when hit. There was only one survivor.
In any case, the CO continued to serve in the USN, and eventually rose to flag rank.
Wiki entry:
http://en.wikipedia.org/wiki/USS_Queenfish_%28SS-393%29