The seaman steering the 605-foot coal freighter Marine Electric just before she capsized and sank in a storm off the Eastern Shore on Saturday, killing 31, testified today that there were rusty holes in the ship's hatch covers and that the vessel sank after a hatch cover in the bow apparently broke and water poured through.

Merchant Seaman Paul Dewey, 28, one of only three survivors of the predawn sinking in the bitter Atlantic, told a marine board of investigation he could see into the hold through holes in the huge hatch cover and that there were gaps where the hatch covers failed to seat properly. He said he noticed the holes when he swept up recently after other seamen had chipped away rust.

Dewey painted a grim picture of an aged merchant vessel with flaws in its navigation lighting, intercom system and life rafts, as well as the leaky hatch covers.

The 39-year-old ship was "going down by the head" as she took water in the bow in the fierce storm, he said. In the confusion of the final hours before the accident, he said, he heard the chief engineer say, "No. 1 hatch is broken up."

Shortly afterward, the captain ordered the engine stopped and all hands prepared to abandon ship. But before the lifeboats were lowered, said Dewey, the ship took a drastic lurch to starboard (right), spilling Dewey and many others overboard. Dewey said he survived when he bumped into an uninflated life raft as he swam away, managed to inflate it and climbed in. Later, he signaled to a rescue helicopter with a $1.29 flashlight he had stuck in a hip pocket.

Dewey broke down and required a recess as he recalled the four shipmates he had tried to hoist aboard the raft. In the stormy seas, men were crying, "Help me, help me," said the heavy-set, ex-machinist from Grandy, Conn. But he said the life raft had no boarding ladder and one by one, they succumbed to hypothermia and he watched them drift away into the darkness.

"Then I was alone," he said.

The board of investigation, comprising Coast Guard and National Transportation Safety Board officials, confirmed that the ship had been due for a biennial Coast Guard dry dock inspection this month but had been granted a two-month delay.

The purpose of the hearing is to establish whether any wrongdoing led to the tragedy and whether government safety or licensing rules need improving, officials said.

Dewey was accompanied by C. Arthur Rutter, a Norfolk lawyer, who said he had filed a $2 million lawsuit in Dewey's behalf and four $15 million suits in behalf of families of four others who died. The suits charge the shipowner, Marine Coal Transport Corp., with "gross, willful and wanton negligence," Rutter said.

Dewey testified that he took the helm at 2 a.m. Saturday for his normal two-hour turn. He knew by then the ship was bow-heavy and within an hour that she was going down. He said speed had been reduced in the afternoon and the ship was "plowing" into 15-foot seas and maintained steerage until the captain ordered the engines cut as the ship started to list.

There was confusion on the bridge in the final two hours, compounded by the weather, constant calls to the Coast Guard and the failure of an intercom to the engine room and the forward navigation lights, Dewey said. It was almost impossible to see the bow 400 feet ahead of the bridge, he said.

Dewey speculated that the cargo of pulverized coal, bound from Norfolk to Somerset, Mass., might have clogged the bilge pumps.

Another survivor, Chief Mate Robert Cusick, is scheduled to testify Friday.