I can see the problem of some kid realizing he won’t make the top spot at his school and then transferring to another school just to take away the top spot away from another student. So I understand the reason for the rule, but it needs to be amended for those who simply end early without a transfer.
Agreed, in my high school the top student was beaten by a transfer student with better grades. He won all the awards except that the football coach would not play him because on the team he had not paid his dues.
The solution is to honor this student and record that the second place student took an extra year to finish. She should have the award as well.
Unfortunately, there are conflicts like this that occur every year because policies are constantly being tested by new situations. It is strange that a school could not find a better solution.