EXHIBIT 4.12
                              ------------

                          COMMERCE GROUP CORP.
                         A Delaware Corporation

                   Three-Year Stock Option to Purchase
                  20,000 Shares of Commerce Group Corp.
                Common Stock at a Price of $.75 Per Share

     For value and consideration received on this 22nd day of October,
1998, Commerce Group Corp. (Commerce), a Delaware Corporation, whose
business address is 6001 North 91st Street, Milwaukee, Wisconsin 53225,
grants a stock option (stock option agreement) to the Henry and Marian
Stark Living Trust (Option Holder), whose address is 2114 West Merrimac
Court, Mequon, Wisconsin  53092, under the following terms and
conditions:

     1.   Issue.  Option Holder will have the right to purchase up to
twenty thousand (20,000) Commerce common shares, ten cents ($0.10) par
value, hereinafter referred to as "option shares," at a price (option
price) of seventy-five cents  ($.75) per share, payable in cash.

     Upon tender of the sum of U.S. fifteen thousand dollars
($15,000.00), Commerce agrees to issue to Option Holder, a total of
thirty thousand (20,000) Commerce validly issued nonassessable and fully
paid common shares, ten cents ($0.10) par value.

     2.   Exercise Date.  Option Holder will have the right to purchase
the common shares at any time during a three (3) year period of time,
commencing from the date of this agreement and expiring on October 22,
2001.

     3.   Tender.  At any time the Option Holder of this stock option
agreement, pursuant to the foregoing terms and conditions, shall exercise
the right to purchase these option shares, the Option Holder of said
stock option agreement shall surrender this stock option agreement for
said shares of option shares, accompanied by proper instruments of
surrender, to Commerce, at its principal office, accompanied by a written
notice to the effect that the Option Holder elects to exercise its stock
option agreement, and stating the name or names in which the certificate
or certificates for shares of option shares shall be issued.  As promptly
as practicable, after the receipt of such notice and the surrender of
this stock option agreement, Commerce shall issue and deliver to Option
Holder or such other holder of the stock option agreement, or to the
written order of such holder, a new certificate or certificates for the
number of shares of option shares issuable upon surrendering of this
stock option agreement.  Such issuance of option shares shall be deemed
to have been effected on the date on which such notice shall have been
received by Commerce and such stock option agreement shall have been
surrendered as hereinabove provided.  All shares of option shares which
may be issued upon exercise of the stock option agreement, shall, upon
issuance, be validly issued, fully paid, and nonassessable by Commerce.

     4.   Partial Purchases.  Option Holder will not have the right to
purchase the option shares in blocks of not less than the total amount of
option shares provided under the stock option agreement.

     5.   Notice of Change of Rights.  Commerce agrees to notify Option
Holder as follows:

          a.   When Commerce shall declare a dividend (or make any other
     distribution) on its option shares, payable otherwise than in cash
     out of the consolidated earnings surplus of Commerce, its
     subsidiaries, and the Commerce/Sanseb Joint Venture (Joint Venture);
     or

          b.   When Commerce shall authorize the granting to the holders
     of its common shares of rights to subscribe for or purchase any
     shares of capital stock of any class or any other rights; or

          c.   Of any reclassification of the common shares of Commerce
     other than a subdivision or a combination of its outstanding shares
     of such stock, of any consolidation or merger to which Commerce is a
     party and for which approval of any stockholders of Commerce is
     required or of the sale or transfer of all or substantially all the
     assets of Commerce, its subsidiaries, and the Joint Venture; or

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          d.   Of the voluntary or involuntary dissolution, liquidation
     or winding up of Commerce; then Commerce shall cause to be filed at
     the office of Commerce, and shall cause to be mailed to the option
     holders of this stock option agreement, at their addresses as they
     shall then appear on the records of Commerce, at least ten days
     prior to the record date specified below, a notice stating:

               (1)  the record date for such dividend, distribution or
          rights or, if a record is not to be taken, the date as of which
          the holders of the option shares of record to be entitled to
          such dividend, distribution or rights are to be determined; or

               (2) the date on which such reclassification,
          consolidation, merger, sale, transfer, dissolution, liquidation
          or winding up is expected to become effective, and the date as
          of which it is expected that holders of the option shares of
          record shall be entitled to exchange their option shares for
          securities or other property deliverable upon such
          reclassification, consolidation, merger, sale, transfer,
          dissolution, liquidation or winding up.

     6.   Procedures.  The Board of Directors of Commerce, or a committee
established by it, shall have the right, from time to time, to adopt
other specific rules of procedure to carry out the full intent of this
stock option agreement, and to do all reasonable acts necessary
therefore; provided that such rules and acts shall not violate the
specific terms of this stock option agreement.

     7.   Dividends.  Until such time as the Option Holder purchases the
option shares under this stock option agreement, the Option Holder shall
not be entitled to receive such dividends and distributions as from time
to time may be declared by the Board of Directors of Commerce.

     8.   Voting.  The Option Holders of this stock option agreement
shall have no voting rights.

     9.   Notice.  The Option Holders of the stock option agreement shall
     be entitled to any notice of shareholders' meetings.

     10.  Reservation of Common Stock.  Commerce shall at all times
reserve and keep available out of its authorized but unissued common
shares, or shall authorize from time to time, an increase in such shares
if required, of such number of its duly authorized shares of common
stock, as shall be sufficient to effect the exercise of this stock option
agreement.

     11.  Registration.  Option Holder, as owner of this stock option
agreement, by acceptance thereof, shall agree for itself and for all
subsequent owners, that before any disposition is made of this stock
option agreement or of the option shares, Option Holder shall give
written notice to Commerce describing briefly the manner of any such
proposed disposition.  No such disposition shall be made unless and until
(1) Commerce has advised such owners that it has received an opinion from
its legal counsel satisfactory to it that no post-effective amendment to
Commerce's registration statement, if any, filed with the Securities and
Exchange Commission (Commission) under the Securities Act of 1933 (Act)
and no other registration under said Act is required to such disposition,
or (2) such post-effective amendment or such other registration has been
filed by Commerce and made effective by the Commission, provided,
however, that Commerce shall have no obligation to so file.

     12.  Restriction on Certificates.  Each certificate for the option
shares to be issued hereunder, until the Option Holder has held this
stock option agreement for a period of two years, without the intent of
selling, transferring, or disposing them, shall bear a legend reading
substantially as follows:

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     "Neither this stock option agreement nor the shares of common stock
     issuable upon the exercise of the stock option agreement have been
     registered under the United States Securities Act of 1933; and the
     common stock to be issued under the stock option agreement has been
     acquired for investment and has not been registered under the
     Securities Act of 1933 or the securities law of any state.  Except
     upon such registration, such securities may not be sold, pledged,
     hypothecated or otherwise transferred unless the transferor delivers
     to Commerce Group Corp., an opinion of counsel satisfactory to
     Commerce Group Corp., its counsel, its transfer agent and its
     counsel that registration is not required and such transfer will not
     be in violation of the Securities Act of 1933 or any applicable
     state securities laws or any rule of regulation thereunder."

     13.  Entire Agreement.  This agreement is the entire, final and
complete agreement pertaining to the subject matter hereof, and it
supersedes and replaces all written and oral agreements heretofore made
or existing by and between the parties or their representatives insofar
as this subject matter is concerned.  Neither party shall be bound by any
promises, representations or agreements except as are herein expressly
set forth.

     14.  Applicable Law.  This agreement is being delivered in and shall
be governed by and construed and enforced in accordance with the laws of
the State of Wisconsin, United States.

     15.  Binding Effect.  This agreement shall be binding upon and inure
to the benefit of all parties and all parties and their respective
successors, heirs, assigns, and legal representatives are subject to its
terms.

     In Witness Whereof, Commerce has executed this stock option
agreement on the day and date first written above.

                              COMMERCE GROUP CORP.


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


This stock option agreement is accepted by Henry Stark and Marian Stark
on behalf of the Henry and Marian Stark Living Trust on the 22nd day of
October, 1998.


/s/ Henry Stark                         /s/ Marian Stark
________________________________        _________________________________
Henry Stark                             Marian Stark