EXHIBIT 99.2

                              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


Mr. Edward L. Machulak
903 West Green Tree Road
River Hills, Wisconsin  53217

Dear Mr. 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 Edward L. Machulak  (ELM) as an  individual  and not as a
Director  or  Officer  of  Commerce  or its  subsidiaries  or as the  authorized
designee of the Joint Venture 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 ELM and the collateral pledged to ELM 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 (Note) dated
          October 1, 1989 in which all of the prior promissory notes were
          consolidated into this single Note amounted to $490,217.19 as
          of that date.  All future advances and interest, not paid, are
          added to this Note.  This Note, together with cash and other
          advances and interest as of March 31, 2002, amounts to
          $4,643,855.84.  This Note bears interest, payable monthly, at
          the rate of 2% over the prime rate established from time to
          time by the First National Bank of Chicago, Chicago, Illinois,
          (now Bank One), but not less than 16% per annum (Schedule of
          Principal and Interest as of March 31, 2002, Exhibit A).
          Commerce is no longer issuing monthly promissory notes for the
          payment of interest, etc., but pursuant to our understanding,
          Commerce is adding these liabilities or deducting any payments
          to the current open-ended, secured, on-demand, outstanding
          promissory note(s).

<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 2 of 10 Pages


     b.   In addition, Commerce owes ELM the sum of $2,457,765.00, which
          is due for unpaid and accrued salaries for a period of
          twenty-one (21) years beginning on April 1, 1981 through March
          31, 2002.  Commerce further acknowledges that ELM's monthly
          salary for twenty-one (21) years is computed as follows:
          eleven years at $67,740 annually ($745,140); four years and six
          months at $114,750 annually ($516,375); and five years and six
          months at $165,000 annually ($907,500).  In addition, the
          Directors adopted a resolution on October 19, 2001 to
          compensate ELM for vacation pay at the rate of one month for
          each year of service, beginning on April 1, 1981 through March
          31, 2002, which amounts to twenty-one months of pay at
          $13,750.00 a month, for a total of $288,750.  At Commerce's
          Annual Board of Directors' Meeting held on October 19, 2001,
          the Directors adopted a resolution, which in part states:

               "BE IT FURTHER  RESOLVED,  That the Directors  agreed that on the
          day the compensation will be paid to Edward L. Machulak, an adjustment
          will be made to compensate  him for the loss of the dollar  purchasing
          value caused by inflation and other economic factors;"

     c.   To infuse funds into Commerce, Commerce borrowed ELM's Commerce
          shares and ELM sold these shares as designee for Commerce's
          benefit with Commerce receiving all of the proceeds.  For these
          share loans, Commerce has agreed to pay ELM interest at the
          rate of prime plus 3%, payable monthly with Commerce's
          restricted common shares and based on the Commerce shares due
          to ELM.  Interest is also due and payable monthly with
          Commerce's restricted common shares for the shares pledged by
          ELM as collateral to others, all for the Company's interest and
          benefit.  All share loans and interest are to be paid annually
          on or before March 31 of each year.  An accounting of the
          Commerce common shares due and/or paid to ELM as of March 31,
          2002, pursuant to a series of Director-approved, open-ended,
          on-demand loan and promissory note agreements by and between
          Commerce and ELM dated April 1, 1990, May 17, 1989, October 14,
          1988 and June 20, 1988, and for certain continuous loans and/or
          pledges of ELM 's securities that have taken place and continue
          to occur during the fiscal year ended March 31, 2002 is as
          follows:

          1.  Share loans                                        None
          2.  Interest shares due on shares pledged
              to banks for an open line of credit                None
          3.  Interest shares due on shares sold for
              the benefit of Commerce                            None
              Total Commerce common shares paid and issued
              as of March 31, 2002 to ELM                        None

<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 3 of 10 Pages



     d.   Reference  is  made  to  four   Director-approved,   open-ended   loan
          agreements  dated  June 20,  1988,  October  14,  1988,  May 17,  1989
          (Exhibits B, C and D of the April 12, 1993,  confirmation  letter) and
          April 1, 1990 (Exhibit 2 of the April 9, 1990 confirmation letter).

     e.   On October 23, 1993, in order to comply with the El Salvador
          Government's minimum capital requirements, the shareholders of
          Mineral San Sebastian S.A. de C.V. (Misanse) voted to increase
          Misanse's capitalization from 119,500 colones to 260,000
          colones.  This was accomplished via a shareholders' rights
          offering on the basis of purchasing one share for each share
          owned with the rights expiring on December 10, 1993.  According
          to Misanse's by-laws, the rights not exercised would be offered
          proportionately to the shareholders who did exercise their
          rights.

          In addition to the rights offering,  the  shareholders  authorized the
          sale of 210 additional  common shares to the following:  ten shares to
          each of the four  officers/directors  (40 shares), five shares to each
          of the remaining  six  directors (30 shares),  three shares to each of
          the ten  supplemental  directors (30 shares),  (the  President and the
          Secretary of the Company,  who are directors of Misanse, had the right
          and they purchased ten and three shares respectively),  and 110 shares
          were sold to the  Company  over and above the  amount of shares it was
          entitled  to by the rights  offering  so that it would  retain its 52%
          ownership. When the Company obtained the concession in 1987, it agreed
          with the El Salvador  Minister of Economy's office not to increase its
          52% ownership of Misanse.  Therefore,  after the rights offering,  the
          Company owned approximately 52%.

          On the  closing  date of December  10,  1993 of this rights  offering,
          there were 264 shares  that were not  subscribed  and  purchased.  The
          Company  would have been  entitled to purchase 137 shares (264 x 52%).
          However,  the Company had been  prohibited to purchase these shares as
          it would have  exceeded its 52% ownership of Misanse  shares.  The 137
          shares  were  acquired  by  ELM  with  prior  approval  of  Commerce's
          directors.  He  acquired  an  additional  four shares by virtue of his
          proportionate  ownership in the  remaining  unsold  shares.  A Misanse
          Director-approved drawing was held to sell the unsubscribed shares. In
          order to close the sales,  52 shares  were  purchased  by ELM which he
          agreed in writing  to hold these  shares in escrow for a period of one
          year for the purpose of providing  certain  named El Salvador  Misanse
          shareholders  time to obtain  funds to  purchase  these  shares at his
          cost. None were purchased by the Misanse shareholders.


<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 4 of 10 Pages



          During June 1995, ELM  personally  purchased an additional 264 Misanse
          common   shares  from  a  Misanse   shareholder   in  an   arms-length
          transaction.  Therefore  ELM  presently  owns a total  of 467  Misanse
          common  shares or  approximately  17.96% of the  total  2,600  Misanse
          common shares issued and outstanding.

2.   Collateral Pledged to ELM

     The collateral specifically pledged to ELM is as follows:

     a.   A Collateral Pledge Agreement dated October 14, 1981 granted to
          ELM by Commerce pledging the following collateral:  2,002,037
          shares of Sanseb common stock, par value $0.10 per share and
          1,346 shares of Mineral San Sebastian, S.A. de C.V. common
          stock, par value one hundred colones per share.  The shares
          pledged are as follows:  the 618 shares originally owned by
          Commerce, and the 618 shares plus 110 shares purchased from the
          October 23, 1993 Misanse rights offering.  Reference is made to
          Exhibit 4 included in the April 9, 1990 confirmation letter.

     b.   A Collateral  Pledge  Agreement  dated February 24, 1983, by Commerce,
          SLE and UDI  collectively  and  individually,  pledging the  following
          collateral:

          300 shares of no par value common shares of Homespan  (formerly  known
          as Trade Realty Co., Inc.),  Certificate No. 7 dated January 21, 1974,
          being 100% of its issued and outstanding shares. Homespan and Commerce
          agree that no additional  shares of Homespan will be issued as long as
          there are any  obligations  due to ELM;  1,800  shares of no par value
          (UDI)  capital  stock  Certificate  No. 17 dated  September  15, 1972,
          representing  100%  of the  shares  issued  and  outstanding.  UDI and
          Commerce agree that no additional shares of UDI will be issued as long
          as there are any outstanding obligations due to ELM. Reference is made
          to Exhibit 5 included in the April 9, 1990 confirmation letter.

     c.   Collateral  Pledge  Agreement  dated July 13, 1983  granted to General
          Lumber & Supply Co., Inc.  (GLSCO) and ELM by Commerce,  SLE, and UDI,
          individually and collectively, pledging the following collateral:

          419,000 shares of fully paid and nonassessable shares with a par value
          of $.05 each of the capital stock of International  Property Exchange,
          Inc.  (IPE),  formerly known as Capital  Funding & Development  Corp.,
          Certificate  2885  dated June 30,  1983;  and it was  verified  during
          Commerce's  fiscal year ended March 31, 2000, that the State of Nevada
          IPE  Charter  was  cancelled  because  IPE did  not  comply  with  the
          Secretary of the State of Nevada annual filing requirements.

<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 5 of 10 Pages



          One voting membership certificate of San Luis Valley Irrigation
          Well Owners, Inc., Membership Certificate No. 871, dated
          November 27, 1979;

          Certificate No. 312, Membership No. 871, consisting of .001447
          units of Augmentation Plan Number One of San Luis Valley
          Irrigation Well Owners, Inc. dated February 8, 1980;

          100  common  shares  of  $0.10  par  value,  Piccadilly  (now  Ecomm),
          Certificate No. 1, dated July 23, 1974.  Ecomm and Commerce agree that
          no additional  shares of Ecomm will be issued as long as there are any
          outstanding  obligations  due to ELM.  Reference  is made to Exhibit 6
          included in the April 9, 1990 confirmation letter.

     d.   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 ELM
          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 first
          lien on the 331-acre Standing Rock  Campground located in
          Camdenton, Missouri.  The Deed of Trust was recorded on
          November 5, 1984 in Camden County, Missouri at 1:24 p.m. in
          Book 122, Page 200.  Reference is made to Exhibit 7 included in
          the April 9, 1990 confirmation letter.  On August 14, 2000,
          with the Directors' approval, this property, via an agreement,
          was conveyed to GLSCO in consideration of the cancellation of
          $1,249,050 of debt owed to GLSCO and for other consideration
          contained in the said agreement.

     e.   Two Deeds of Trust to a Colorado Public Trustee granted by SLE
          to ELM are described as follows:

          A Deed of Trust dated March 20, 1984,  consisting  of four lots in the
          San Luis North Estates Subdivision,  Costilla,  Colorado, and recorded
          at 9:01 a.m. on August 2, 1984, in Book 238,  Page 600,  Reception No.
          157128;

          A Deed of Trust dated  October 4, 1982,  consisting  of six parcels of
          land in the San Luis North Estates  Subdivision,  Costilla,  Colorado,
          and  recorded  at 8:40 a.m.  on October 6,  1982,  in Book 228,  Pages
          300-301, Reception No. 148981. Reference is made to Exhibit 8 included
          in the April 9, 1990 confirmation  letter.  All ten lots were conveyed
          with  the  Directors'   approval  to  the  Sylvia  Machulak   Rollover
          Individual  Retirement  Account  (SM  RIRA) on  October  3,  2000,  in
          consideration  of a partial  cancellation of debt due from Commerce to
          the SM RIRA.

<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 6 of 10 Pages



     f.   GLSCO, ELM, the Edward L. Machulak Rollover Individual
          Retirement Account (ELM RIRA) and the 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 the Joint Venture, and to the mine
          concession granted by the Government of El Salvador to 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 have the right to assign this and any
          subsequent concession agreement.  Reference is made to Exhibit
          9 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 of the precious metal ore reserves, is
          pledged as collateral to the above named parties, and also
          includes Sylvia Machulak, as an individual, and hereinafter
          referred to as SM.

     g.   An interest with GLSCO 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, Commerce/Sanseb 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
          accessi ons to, all spare 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 10, 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).


<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 7 of 10 Pages



     h.   Commerce and Sanseb agree that ELM has as collateral, the
          assignment and pledge of all of their rights, titles, claims,
          remedies, and interest whatsoever in the Joint Venture which
          was formed on September 22, 1987.  In the event of default,
          whatever interest Commerce and Sanseb have in the Joint Venture
          will be transferred to ELM and it will include whatever assets
          are owned by the Joint Venture, including, but not limited to
          the precious metal ore reserves.  Reference is made to Exhibit
          C included in the April 8, 1991 confirmation letter.

3.   Bonus

     On February 16, 1987, by a Consent Resolution of all of the Directors,  ELM
     was  awarded as a bonus  compensation,  the  following:  for a period of 20
     years,  commencing the first day of the month  following the month in which
     Commerce  begins  to  produce  gold  from  its El  Salvadoran  gold  mining
     operations,  Commerce  will pay annually to ELM, 2% of the pre-tax  profits
     earned from these  operations.  Reference is made to Exhibit 11 included in
     the April 9, 1990 confirmation letter.

4.   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 the 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  deductin g 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>

Mr. Edward L. Machulak
May 13, 2002
Page 8 of 10 Pages


5.   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.

6.   Guarantors

     This agreement  further confirms that Commerce and all of the following are
     guarantors to the loans made by ELM to Commerce:  Joint Venture,  Homespan,
     Ecomm, SLE, Sanseb and UDI. They jointly and severally guarantee payment of
     the note(s)  that were issued to ELM 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 12 included in the April 9, 1990  confirmation
     letter.

7.   Re-Execution Agreement

     In the event ELM deems that it is necessary  or  advisable  for him 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 ELM.  Commerce  also
     acknowledges  that  Commerce may be liable to pay certain  costs related to
     any of the  transactions  entered  into  with ELM.  If at a later  date ELM
     determines  that an error has been made in the payment of such costs to him
     then he 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 ELM's written request. The failure of Commerce to comply with Commerce's
     obligation  hereunder  shall  constitute a default and shall entitle ELM to
     the remedies  available for default under any  provisions of the agreements
     including,  but not limited to the  promissory  note and/or the  collateral
     pledge agreement.

<PAGE>

Mr. Edward L. Machulak
May 13, 2002
Page 9 of 10 Pages


8.   Omissions

     Commerce  believes that it has included all of its obligations,  monies due
     and has listed  all of the  collateral  due to ELM,  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.

9.   Real Estate Ownership Adjacent to San Sebastian Gold Mine, Inc.
     (SSGM)

     Commerce  acknowledges that ELM personally owns the real estate adjacent to
     and bordering  the north  boundary line of the SSGM located in the Republic
     of El Salvador,  Central  America,  and that Comseb is  performing  certain
     exploration  and  exploitation  on this  property.  These  costs  are to be
     payable  by an  offset to the  amounts  due to ELM.  (Reference  is made to
     Exhibit B,  "Concesion de Exploracio El Paraiso" - plat map that identifies
     the ELM  (Macay)  "92.13  Hectareas,"  in the April 13,  1998  confirmation
     letter).

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>

Mr. Edward L. Machulak
May 13, 2002
Page 10 of 10 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:

/s/ Edward L. Machulak
------------------------------------------
Edward L. Machulak,  as an Individual and not as a Director or Officer of any of
the Corporations mentioned in this letter.
Date:  May 13, 2002


<PAGE>


                         Exhibit A to 99.2
    (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 99.2
                   (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.)