I believe this might be another example of a strange surrender result. The 104th Army was in supply (and the supply lane reached by land [level 4 IIRC]) and had a retreat path East (across the 3-2 and the HQ). From what I understand of the rules, it should have gone to the queue.
As I said, they (unexpected surrenders) do not happen very often but they do from time to time. Maybe the port created some confusion in the interpretation of the retreat path in this particular case?
