All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.
Seeing your mother-in-law beating you in a dream does not mean a great deal and you should not take this into consideration, as it is most likely in this case that it is only seeing what you are preoccupied with while awake. It might be more important to study the problem between you and your mother-in-law.
The most important objectives of Islamic Law are to achieve affection and mercy among the Muslims especially among those who are related by marriage. If your mother-in-law is treating you and your sister badly as you stated in the question, then we advise you to be patient and kind to her, as being kind to her is being kind to your husbands. Both of you have to try to find out the reasons of these problems without any kind of suspicion, as Allaah says (which means): {O you who have believed, avoid much suspicion; indeed, suspicions are sins.}[49:12]. Each of you has to seek the help of her husband or any other relative to solve the problem, and if there is a sincere intention to this effect, Allaah may reconcile you as He says (which means): {If they both desire reconciliation, Allaah will cause it between them.}[4:35]. Finally, you should not cut relations with her except after exhausting all other means of reconciliation and efforts to please her and the like. Cutting relations with her could lead to disputes, and one should not resort to it except if one is sure that this measure is beneficial. However, if the harm of the mother-in-law could not be repelled except by cutting relations with her, then there is no harm in doing so.
Allaah knows best.