We have studied the phase diagram of a mixed monolayer system of 4'-n-octyl-4-cyanobiphenyl (8CB) and stearic acid (SA) at the air-water interface by surface manometry and optical microscopic techniques. We found that in the mixture, a liquid condensed phase (also known as L-2) was induced which does not occur in the monolayers of the individual components. The induction occurs over a large range of molar concentrations viz. 3% to 95% of SA in 8CB. More interestingly, we observed a phase separation of the liquid expanded (LE) phase (also known as L-1) into an 8CB-rich LE phase and an SA-rich LE phase for molar concentrations in the range 55% to 95% of SA in 8CB. We also observed a co-existence of three stable phases.