Melt chocolate in double boiler over hot water. Set aside to cool.
Grease & flour 3 - 8-inch cake pans. Line with wax paper circles.
Preheat oven to 175 degrees C.
Combine flour, sugar, baking powder and salt. Mix on low for about one minute until blended.
Add butter and 1 Cup milk. Beat at medium speed for 1 - 1/2 minutes, scraping sides of bowl often.
In another bowl, combine vanilla, remaining 1/3 cup milk and eggs. Beat lightly.
Add to batter in three parts, beating at medium-high speed for 25 seconds after each addition.
Scrape sides of bowl after each part.
Divide batter in half.
Stir melted chocolate into half of the batter and mix well.
Place checkerboard cake divider in pan and hold down.
Pour darker batter in center and outer rings. Pour lighter batter in middle ring.
*** ONLY FILL PANS HALF WAY UP ***
Remove divider carefully by lifting straight up. Rinse divider & dry. Place divider in next pan and repeat dark-outside, light middle and dark center circle. Remove and clean divider as before.
Place in 3rd cake pan. This time light layer-outside, dark layer-middle and light layer-inside. Carefully remove and clean divider as before.
Bake for 20 minutes. Test for doneness with cake tester. Do not over bake the cake!
Cool in pans on wire racks for 10 minutes. Remove from pans and cool completely on wire racks. After cakes are cool, stack so outside colors alternate.
I used whipped cream for the layering frosting as well as for the outside of the cake, then sprinkled some grated chocolate and decorated with smarties.
Serve and enjoy!