We can think of capillary rise in terms of minimization of energy of a system. A fluid rises inside a tube because increasing the contact area between the tube and the fluid, while decreasing the contact area between tube and air, reduces the surface energy of the entire system (here is a nice explanation). But then you may expect that the fluid will continue to rise forever in a tube of infinite length. However, that is not what happens - the fluid rises to a certain height and stops. This is because, while fluid rising in the tube decreases surface energy, the potential energy of the system increases. The total energy therefore first decreases,reaches a minima and then increases (with increase in the height of the water column). The capillary rise stops exactly at the height where the total energy of the system is a minimum.
The same reasoning explains why the fluid would not flow over the outside surface of a shorter tube. While it is true that this would increase the contact area between fluid and tube, it also increases contact area between fluid and air (this factor did not come into play when the fluid was rising inside the tube), which increases the total energy of the system. The fluid therefore stops right at the top of the tube because that is the minimum energy state.