My guess - a broken/incomplete braze joint at the seat stay cap. Ham-handed brake job at a remedy. Blobs of braze were aesthetically unacceptable. Bondo added attempting to hide the big blobs of braze alloy (rather than filing them off).

This is what is commonly referred to as a "hack job by Bubba".

Frame looks like a Raleigh Competition to me.

What would I do?

File the excess braze material off. If this reveals hidden damage, get it repaired properly.

P.S. - You need to remove all the Bondo before you try to powder coat the frame.