When the creature has the audience of Victor in chapters 11-14, he attempts to justify his actions and explain life from his point of view. He was born benevolent--he smiled at his "father" as Victor slept. He was gentle and seeking love as a toddler would. He was in need of acceptance, guidance, love, and a proper parent. What he received was a irresponsible creator who abandoned him at the first moment Victor was able.
The creature left the apartment and sought to survive. He attempted to assimilate himself into society which spurned him. He was beaten, cursed, and chased out of communities. He was forced to live in isolation, coming out only at night and living on berries and bark. He learned to read in the hovel of the De Lacey family, and at that point discovered from the manuscript and journals of Victor how he came to be made and abandoned.
After the De Laceys also run from him, the creature desires revenge on Victor. So, as the quote states, "I was benevolent and good; misery made me a fiend."
This statement is made by Victor Frankenstein's creature when he tries to justify his murderous actions. The creature claims that he was not evil from the beginning, but became so because he was rejected by his creator and the rest of society.
Mary Shelley's depiction of the creature was undoubtedly influenced by the philosophical theories of John Locke, who argued that the human mind is a "tabula rasa" or "blank slate" that is written on by personal experience. In this view, a person's family and social conditioning are paramount in making them the person they are. Since his own "parent" was disgusted by him and left him to fend for himself, the creature descends into evil behavior.