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.)