EXHIBIT 99.1

                          COMMERCE GROUP CORP.
                           6001 NORTH 91ST ST.
                       MILWAUKEE, WI  53225-1795
                    414/462-5310 . FAX 414/462-5312
   Stock Symbols:  CGCO (OTCBB)  CMG OR CMG.BN (Boston Stock Exchange)

AND/OR COMMERCE/SANSEB JOINT VENTURE (Joint Venture)
AND/OR HOMESPAN REALTY CO., INC. (Homespan)
AND/OR ECOMM GROUP INC. (Ecomm)
AND/OR SAN LUIS ESTATES, INC. (SLE)
AND/OR SAN SEBASTIAN GOLD MINES, INC. (Sanseb)
AND/OR UNIVERSAL DEVELOPERS, INC. (UDI)
ALL LOCATED AT THE SAME ADDRESS


May 13, 2002


Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
6001 North 91st Street
Milwaukee, Wisconsin  53225

Dear Mrs. Machulak:

At today's Commerce Group Corp. (Commerce) Directors' meeting, the
Directors were informed about the confirmation and status letter you
requested from Commerce and its affiliates to establish and confirm the
amount due and the collateral pledged to General Lumber & Supply Co.,
Inc. (GLSCO)  as of Commerce's fiscal year ended March 31, 2002.  Today,
Commerce's Directors approved, ratified and confirmed the contents of
this letter and authorized me to authenticate and confirm the outstanding
obligations due to GLSCO, and to describe the collateral pledged to GLSCO
as of Commerce's fiscal year ended March 31, 2002, which are as follows:


1.   Promissory Notes and Other Obligations

     a.     An open-ended, secured, on-demand promissory note no. 3 which
            was originally issued to GLSCO on December 31, 1981 in the
            sum of $16,836.37 and has been open-ended since that date and
            is to include all future advances, services, charges and
            interest on a monthly basis.  Pursuant to Commerce's
            Directors' approval on October 1, 1990, the interest rate on
            this note was increased to a rate of 4% over the prime rate
            base established by the First National Bank of Chicago,
            Chicago, Illinois.  Beginning with April 1, 1994, the
            interest rate is 4% over the prime rate base established by
            the First National Bank of Chicago, Chicago, Illinois, (now
            Bank One), but not less than 16% per annum.  The interest is
            payable monthly and the total amount due to GLSCO on this
            promissory note as of March 31, 2002 is $1,098,193.34.
            (Schedule of Principal and Interest as of March 31, 2002,
            Exhibit A)

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 2 of 8 Pages



            Commerce is no longer issuing monthly promissory notes for
            the payment of interest, purchases, rent, etc., but pursuant
            to our mutual understanding, Commerce is adding these
            liabilities or deducting any payments to the current
            open-ended outstanding promissory note(s).

     b.     Commerce leased approximately 3,100 square feet on a
            month-to-month basis for its corporate headquarter's office;
            the monthly rental charge was $2,145 since October 1, 1992.
            As of December 1, 1995, Commerce increased the space it rents
            to 4,032 square feet, and the monthly rental charge was
            increased to $2,789.  All other terms and conditions of the
            Amended October 1, 1992 Lease Agreement remain the same.
            (Reference is made to Exhibit B, December 1, 1995 Amended
            Lease Agreement, included in April 13, 1998 confirmation
            letter.) (Reference is made to Exhibit B, Lease Agreement,
            included in April 12, 1993 confirmation letter.)

     c.     Commerce also acknowledges that it purchases on an open
            account from GLSCO from time to time materials, supplies etc.
            that it needs for itself or for the Joint Venture.  Some of
            the purchases are made through GLSCO because Commerce does
            not have the credit availability from the various sellers of
            goods, merchandise, etc.  that is required by it or the Joint
            Venture.  The amount due from time to time varies.  As of
            March 31, 2002, there is no amount due on this open account.

     d.     GLSCO from time to time has canceled part of its debt by the
            purchase of restricted Commerce common shares at a price as
            sold to third party purchasers on an arms-length transaction.
            There were no such transactions consummated during this
            fiscal year.  However, Commerce, Homespan and GLSCO entered
            into an agreement on August 14, 2000 in which Commerce and
            Homespan agreed to sell to GLSCO the real estate identified
            as the Standing Rock Campground (SRC) located at the Lake of
            the Ozarks in Camden County, Missouri, for the sum of
            $1,249,050.  A Warranty Deed was conveyed to GLSCO and filed
            with the State of Missouri Camden County Recorder.  The
            contract stipulates that if SRC is sold by GLSCO within one
            year from November 6, 2000, then an adjustment would be made
            to the promissory note issued by Commerce to GLSCO as shown
            in the following example:

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 3 of 8 Pages

                                               Example A     Example B
                                               ---------     ---------

            Net proceeds (including sales
            commission and related
            expenses) received from the
            sale of the Standing Rock
            Campground to a third party        $1,500,000    $1,000,000

            General Lumber & Supply Co.,
            Inc.'s cost via reduction of
            its promissory note due from
            Commerce Group Corp.                1,249,050     1,249,050
                                               ----------    ----------
            The difference would be added
            or subtracted to the General
            Lumber & Supply Co., Inc.
            promissory note with an
            interest adjustment retroactive
            to the closing date of the
            sale.                              $  250,950    $ (249,050)
                                              A Subtraction   An Addition

            On March 8, 2001, GLSCO executed a listing contract with
            Gaslight Gundaker GMAC Real Estate Agents located in Laurie,
            Missouri, to sell the SRC for a sum of $1.8 million less a 6%
            real estate broker's commission and less all usual related
            costs incurred in the sale of this type of real estate.

            In order to make an orderly transaction, the parties agreed
            that Commerce would operate the SRC until the end of its
            fiscal year, which is March 31, 2001.  Therefore, the amount
            of the promissory note due to Commerce was reduced by the
            purchase price of $1,249,050 during the fiscal year ended
            March 31, 2001.  At the close of business on March 31, 2002,
            Commerce owed GLSCO a balance of $1,098,193.34.  The SRC was
            not sold during this agreement period, therefore, the above
            arrangement automatically expired on November 6, 2001.

     e.     On July 12, 1999, two-year stock options to purchase 500,000
            restricted Commerce common shares, $0.10 par value, at a
            price of $0.50 per share were issued to GLSCO.  The price and
            terms were based on arms-length transactions that had taken
            place during that period of time.  These options were not
            exercised.

     f.     On June 30, 2001, GLSCO purchased 250,000 restricted common
            shares at a price of $.15 per share and received a two-year
            stock option to purchase 250,000 common shares at a price of
            $.25 per share.  The terms of this transaction are no less
            favorable than those obtained from arms-length third parties.

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 4 of 8 Pages


2.   Collateral Pledged to GLSCO

     The collateral specifically pledged to GLSCO is as follows:

     a.     San Luis Estates, Inc. (SLE) Certificate No. 24 which is
            dated December 31, 1981, consisting of 48,645 common shares,
            $0.50 par value, being 50% of the total issued and
            outstanding shares.  SLE and Commerce agree that no
            additional shares of any kind whatsoever of SLE will be
            issued as long as any monies are due to GLSCO.  Reference is
            made to Exhibit 3 included in the April 9, 1990 confirmation
            letter.

     b.     A Deed of Trust dated November 3, 1983 by and between
            Homespan, as party of the first part, and Ronald K.
            Carpenter, Esq.  (Trustee), as party of the second part, for
            the benefit of Edward L.  Machulak (ELM),  as an individual,
            and not as a Director or Officer of Commerce and GLSCO, as
            party of the third part.  The Deed of Trust is in favor of
            ELM and GLSCO and is open-ended to secure the promissory
            note(s) due to ELM and GLSCO and to further secure any future
            obligations that Commerce or Homespan may incur from them.
            This Deed of Trust is issued to Ronald K. Carpenter, Esq.,
            Trustee for the benefit of ELM and GLSCO and is a lien on the
            331-acre Standing Rock  Campground located in Camdenton,
            Missouri.  The Deed of Trust was filed for record on November
            5, 1984 in Camden County, Missouri at 1:24 p.m. in Book 122,
            Page 200.  See item 1(d) contained herein.  Reference is made
            to Exhibit 4 included in the April 9, 1990 confirmation
            letter.

     c.     GLSCO, ELM, the Edward L. Machulak Rollover Individual
            Retirement Account (ELM RIRA) and the Sylvia Machulak
            Rollover Individual Retirement Account (SM RIRA) collectively
            and individually identified as the lender(s),   have been
            assigned on October 19, 1987, all of the rights, titles,
            claims, remedies and interest in and to the mine concession
            granted by the Government of El Salvador to Mineral San
            Sebastian, S.A. de C.V. (Misanse) on July 23, 1987, and
            thereafter from time to time amended, and which Misanse then
            assigned to the Joint Venture on September 22, 1987.  This
            collateral specifically includes all of the San Sebastian
            Gold Mine precious metal ore reserves.  Commerce and the
            Joint Venture had the right to assign this and any subsequent
            concession agreement.  Reference is made to Exhibit 5
            included in the April 9, 1990 confirmation letter. Effective
            February 1996, the Government of El Salvador approved a
            revised version of the mining law.  Therefore, Commerce
            applied for the San Sebastian Gold Mine mining concession
            applicable to this mining law.  This concession is subject to
            compliance requirements which have been presented to the El
            Salvador Director of Mines and Hydrocarbons.  Therefore, it
            is clearly understood that this concession, and all of the
            rights thereunder, in addition to the concession granted on
            July 23, 1987, together with all precious metal ore reserves,
            is pledged as collateral to all of the parties herein
            mentioned, and also includes Sylvia Machulak, as an
            individual, and hereinafter referred to as SM.

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 5 of 8 Pages


     d.     An interest with ELM in filing financing statements under the
            Uniform Commercial Code by an assignment and pledge of all
            corporate assets, such as but not limited to the property of
            Commerce, Joint Venture, SLE, and Homespan, wherever located,
            now owned or hereafter acquired is as follows:  all accounts,
            all land contract receivables, contract rights, instruments
            and chattel paper; all inventory, all jewelry and precious
            stones, and all documents relating to inventory, including
            all goods held for sale, lease or demonstration, to be
            furnished under contracts of service, and raw materials, work
            in process and materials and supplies used or consumed in the
            business of Commerce, Joint Venture, SLE, and Homespan; all
            office furniture, fixtures and all other equipment; all
            general intangibles, all stock and securities of any kind,
            and all rights, titles, and interest in the Commerce Group
            Corp./San Sebastian Gold Mines, Inc. Joint Venture, and all
            additions and accessions to, all spar e and repair parts,
            special tools, equipment and replacements for all returned or
            repossessed goods the sale or lease of which gave rise to,
            and all proceeds and products of the foregoing.  Reference is
            made to the Wisconsin Department of Financial Institutions
            Uniform Commercial Code filing, Exhibit 6, included in the
            April 9, 1990 confirmation letter, the renewed UCC-1 filing
            on December 23, 1996, Exhibit B, included in the April 14,
            1997 confirmation letter, and the UCC-4 continuation filing
            on June 27, 2001 at 8:55 a.m., Filing #02078155 (Exhibit B).

3.   Cross Pledge Collateral Agreement

     GLSCO, ELM, the ELM RIRA and the SM RIRA individually are entitled
     to specific collateral that has been pledged to them by Commerce,
     its subsidiaries, affiliates and the Joint Venture.  Upon default by
     Commerce, or its subsidiaries or affiliates or the Joint Venture,
     then GLSCO, ELM, the ELM RIRA and the SM RIRA have the first right
     to the proceeds from the specific collateral pledged to each of
     them.  Commerce, its subsidiaries, affiliates and Joint Venture also
     have cross-pledged the collateral without diminishing the rights of
     the specific collateral pledged to each of the following:  GLSCO,
     ELM, the ELM RIRA and the SM RIRA.  The purpose and the intent of
     the cross pledge of collateral is to assure GLSCO, ELM, the ELM RIRA
     and the SM RIRA, that each of them would be paid in full; thus, any
     excess collateral that would be available is for the purpose of
     satisfying any debts and obligations due to each of the named
     parties, including SM.  The formula to be used (after deducting the
     payments made from the specific collateral) is to total all of the
     debts due to GLSCO, ELM, the ELM RIRA, the SM RIRA, and SM, and then
     to divide this total debt into each individual debt to establish
     each individual's percentage of the outstanding debt due.  This
     percentage then will be multiplied by the total of the excess
     collateral to determine the amount of proceeds derived from the
     excess collateral and then the amount due to each of them would be
     distributed.

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 6 of 8 Pages


4.   Cancellation of Inter-Company Debts Upon Default

     Since part of the collateral pledged to GLSCO, ELM, the ELM RIRA and
     the SM RIRA is the common stock of Homespan, Ecomm, Sanseb, SLE,
     Misanse, UDI and the interest in the ownership of the Joint Venture,
     Commerce agreed, upon default of the payment of principal or
     interest to any of the individual lender(s) mentioned herein, that
     it will automatically cancel any inter-company debts owed to
     Commerce by any of its wholly-owned subsidiaries or affiliates or
     the Joint Venture at such time as any of the stock or Joint Venture
     ownership is transferred to the collateral holders as a result of
     default of any promissory note.

5.   Guarantors

     This agreement further confirms that Commerce and all of the
     following are guarantors to the loans made by GLSCO to Commerce:
     Joint Venture, Homespan, Ecomm, SLE, Sanseb and UDI.  They jointly
     and severally guarantee payment of the note(s) that they caused to
     be issued and also agree that these note(s) may be accelerated in
     accordance with the provisions contained in the agreement and/or any
     collateral or mortgages securing these notes.  Also, Commerce, all
     of its subsidiaries and the Joint Venture agree to the cross pledge
     of collateral for the benefit of GLSCO, ELM, the ELM RIRA and the SM
     RIRA.  Reference is made to Exhibit 7 included in the April 9, 1990
     confirmation letter.

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 7 of 8 Pages


6.   Re-Execution Agreement

     In the event GLSCO deems that it is necessary or advisable for GLSCO
     to have Commerce re-execute any document(s) entered into, including,
     but not limited to the promissory note or collateral agreement,
     Commerce will re-execute such document(s) reasonably required by
     GLSCO.  Commerce also acknowledges that Commerce may be liable to
     pay certain costs related to any of the transactions entered into
     with GLSCO. If at a later date GLSCO determines that an error has
     been made in the payment of such costs to GLSCO, then GLSCO may
     demand payment and Commerce does hereby agree to make such payment
     forthwith.  All requests for corrections of any errors and/or
     payment of costs shall be complied with by Commerce within seven (7)
     days of GLSCO's written request.   The failure of Commerce to comply
     with Commerce's obligation hereunder shall constitute a default and
     shall entitle GLSCO to the remedies available for default under any
     provisions of the agreements including, but not limited to the pro
     missory note and/or the collateral pledge agreement.

7.   Omissions

     Commerce believes that it has included all of its obligations,
     monies due and has listed all of the collateral due to GLSCO,
     however, since these transactions have taken place over  a long
     period of time in which changes could have taken place, it is
     possible that inadvertently some item(s), particularly collateral,
     could have been omitted.  If that should prove to be a fact, then
     Commerce, the Joint Venture, Homespan, Ecomm, SLE, Sanseb, and UDI
     agree that those omissions of collateral, if any, are meant to be
     included as collateral under this confirmation agreement.

If you are in agreement with the contents of this letter, please sign
below and return one copy to Commerce.

Very truly yours,

COMMERCE GROUP CORP.

/s/ Edward A. Machulak

Edward A. Machulak
Secretary

<PAGE>

Mrs. Sylvia Machulak
President
General Lumber & Supply Co., Inc.
May 13, 2002
Page 8 of 8 Pages


The contents of this letter are agreed by the following:

COMMERCE/SANSEB JOINT VENTURE          HOMESPAN REALTY COMPANY, INC.
as Guarantor (Joint Venture)           as Guarantor (Homespan)

/s/ Edward L. Machulak                 /s/ Edward L. Machulak
_____________________________          _____________________________
By:  Edward L. Machulak,               By:  Edward L. Machulak,
     Auth. Designee                         President


ECOMM GROUP INC.                       SAN LUIS ESTATES, INC.
as Guarantor (Ecomm)                   as Guarantor (SLE)

/s/ Edward A. Machulak                 /s/ Edward L. Machulak
_____________________________          _____________________________
By:  Edward A. Machulak,               By:  Edward L. Machulak,
     President                              President

SAN SEBASTIAN GOLD MINES, INC.          UNIVERSAL DEVELOPERS, INC.
as Guarantor (Sanseb)                   as Guarantor (UDI)


/s/ Edward L. Machulak                 /s/ Edward L. Machulak
_____________________________          _____________________________
By:  Edward L. Machulak,               By:  Edward L. Machulak,
     President                              President


Accepted by:

GENERAL LUMBER & SUPPLY CO., INC.

/s/ Sylvia Machulak
____________________________________
By:  Sylvia Machulak, President
Date:  May 13, 2002

<PAGE>

                       Exhibit A to Exhibit 99.1
         (Schedule of Principal and Interest as of March 31, 2002
               has been purposely omitted as it only reflects
             the calculations of the principal and interest.)


<PAGE>

                       Exhibit B to Exhibit 99.1
            (UCC-4 Continuation Filing on June 27, 2001
                    at 8:55 a.m., Filing #02078155
         has been purposely omitted as it is a public record.)