That's my feeling. It's cracked below the cap, and the wrapper is damaged. I tend to keep my cigars wet while I smoke them, so I have unraveling issues with a lot of cigars anyway. This will only complicate things.That looks to be below the cap to me. Maybe I'm looking at the pictures incorrectly, but if the wrapper is cracked, especially where it's going to contact your mouth, I can almost guarantee it will unravel a bit.
If it was a $5 cigar, I'd probably say smoke it, but given that it's a 1926 - I'd ask for it to be replaced. Then again, I'm a pretty big pain in the ass most times.
And it's a 1926, if I were paying for this as a single, it's a $20 cigar. If this were virtually any other cigar, this thread wouldn't exist. I'd smoke it and move on, just as I've done with other cigars.