It looks like an older vintage balloon head case, and not a more modern solid head case, like the one next to it. Manufacturing processes weren't as precise then as they are now, and if it was meant to be fired in battle, the cartridge didn't "fail" per say. It just is not any good for a reloader, sad to say. Probably a lot of those type of "defects" back in the day that nobody noticed.
It might be a case of age and poor storage, but I doubt it. Just a manufacturing defect that I really hope didn't hurt anyone.