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.)