Melt chocolate in a double boiler, stir occasionally untill smooth.
Remove from heat and let cool.
Preheat oven at 350°F.
Grease two 9 inch round cake pans.
In a large bowl sift flour, baking powder, salt and baking soda; set aside.
Lightly beat egg yolks until pale coloured; in another bowl cream butter with sugar, add the yolks and beat until well combined.
Add the chocolate, mix until well incorporated.
Add the dry ingredients in thirds, alternating with the milk and the vanilla, beating after each addiction.
In a separate bowl beat the egg whites until White and fluffy, gently foldinto the batter.
Divide batter into the two cake pans and bake for 45- 50 minutes.
Let the cakes cool for 5 minutes in the pan then remove them and cool completely on wire racks.
For the frosting:
Melt chocolate in a double boiler over very low simmering water.
Stir occasionally until smooth, remove from fire and let it cool.
In a large bowl, on the medium speed of the mixer, beat butter aone until creamy.
Add the milk carefully and beat again.
Add the melted chocolate and vanilla and beat for about 3 minutes.
Gradually add sugar and beat on low speed until creamy and fluffy (about 3 minutes more).
Makes one two layer 9 inch cake.
Frosting is enough to fill and cover the cake or decorate 2 dozen of cupcakes.