Money, sex, watermelons, and donuts... Yet you fail to mention beer.
I concur with the other peeps. You were playing a tournament since it paid places. Maybe there were no escalating blinds or antes, but it was still a tournament. And whoever lost with the biggest stack went out ahead of the smaller stack.
Player A: Full house, aces over queens, $10,000 in chips. He shoves.
Player B: Top two pair, $1,000 in chips. He calls player A's shove.
Player C: Two pair, $8,000 in chips. He calls.
Yeah, player B had the second best hand, but player C was doing much much better at the time of the call. So when they were both eliminated, whoever was in better shape in the *game* (not the hand) gets the prize. A loss is a loss. It doesn't matter how bad you lose.
This is sort of why we have side pots, because what chips you have going in is vital to what you are entitled to end up with at the end at the end of the hand.