I can tell you this much, I definitely think that the daughter (your wife’s sister) threw the first punch.
And legally, it doesn’t matter if your wife was “annoying” verbally, with what she said... NOBODY HAS THE LEGAL RIGHT TO ASSAULT SOMEONE JUST BECAUSE THEY WERE OFFENDED.
Also, you seem to be a little bit too passive. You need to stick up for your wife and also for yourself. Why are you letting prepubescent children tell you how you should be thinking? Don’t you think that is kind of idiotic? I mean, honestly.
Last but not least, you should be sticking up for your wife before anybody else. It’s called loyalty. And if you can’t even be loyal to your wife, then it’s no surprise that she is passive aggressive sometimes.
With that said, I’m not approving of passive aggressiveness, (although it’s better than real physical aggression obviously). I definitely think that you should tell your wife not to be passive aggressive with you anymore. And to tell you how she feels openly.
But at the end of the day, you have a responsibility to stick by your wife. And it sounds like your wife’s sister is crazy and violent. You should support your wife here- even if she’s a little annoying sometimes. She still was a victim of violence. That’s not okay.
And the sister is obviously just accusing your wife of hitting her first NOW, because she’s afraid she might get into trouble for hitting your wife first.
I also agree 100% with the other person that said your wife should come home immediately, and you both should call Protective services for the mother.