The launch of the Dix did not bode well for the little steamer, refusing to budge down the causeway, having to be forcibly hauled into the water the next day. The Dix was from the outset top heavy and inclined to roll uncomfortably. During initial testing she was rejected by the inspectors twice. Finally the solution was to add seven tons of gravel ballast in the hull and five tons of heavy iron strips bolted onto her keel.
She was intended for one route, between Seattle and Alki Point, carrying on average 150 passengers. The evening of 18 November 1906, the Dix filled in for the Monticello on the Seattle-Port Blakeley route. She carried 77 passengers and set off into calm, clear weather. Her Captain Lermond was tallying fares while a mate Dennison (unlicensed) turned the Dix into the path of another steamer, the Jeanie, ten times the size of the Dix. Off Duwamish Head, the Jeanie loaded with iron ore and despite reversing her engines was unable to avoid the Dix.
The collision caused the Dix to heel over to her port side, admitting water rapidly. She rolled over and sank in 188 m. Captain Lermond described the scene:
“The sight fascinated me by its horror. Lights were still burning and I could see people inside of the cabin. The expressions on the faces were of indescribable despair. ... There were cries, prayers, and groans from men and women, and the wail of a child and the shouts of those who were fighting desperately to gain the deck.”
Survivors were rescued by the Florence K, and a newspaper account of the time reported:
"Tottering and shaking with tearless sobs ... (Adeline) Byler was led from the steamboat unable to walk unassisted,"
" 'Have you seen my boys? Oh, my boys!' was the inconsolable question that Mrs. Byler put to every man.
As nothing definite was heard, nor either of them put in an appearance, Mrs. Byler collapsed."
Varying reports had as many as 45 passengers lost, including Mrs Byler's sons, Charles and Christian, and their sister, Lillian trapped below deck. The 188 m depth to which the Dix sank made it impossible to recover bodies. Most of the victims were from Port Blakeley and the little town was described as:
"running of a gauntlet of shrieks and moans of grief-stricken wives and mothers ..."
Captain Lermond, who survived, had his master's license revoked. This was reinstated a year later and he only worked on tugs for the rest of his career. In 1973, a memorial to the Dix was dedicated in a small park at Duwamish Head.