Here's the point: regardless of what the British "were" doing on the L, the U-boat captain had NO WAY of knowing that; certainly no record of heavy uses of passenger ships of this type, therefore it was still indefensible on his part. Regardless, the U.S. should have gone to war over the dozens of OTHER sinkings of neutral ships that the Germans engaged in.
Initially, U-boats would surface and allow the crews of merchant ships to take to the lifeboats before sinking the ship, but the appearance of Q-ships, merchant ships with disgused armament which were used to lure U-boats to the surface and into gun range, put a stop to the "courtesies rendered" at the beginning of the war. Just as the American Civil War introduced modern weaponry into Napoleonic Tactics with horrendeous results, the airplane, machine gun and submarine introduced total war, touching combatants and non-combatants alike. It was the end of an era.
The Islamofascist movement has now moved us on to another era, where the unarmed civilian is the preferred target as opposed to the armed combatant. The era of Full Terrorism.