Hi MamaBear - welcome to Mamapedia.
The short answer here is, you don't expose children to the toxic issues from your childhood. If your mother is so awful, why are your children spending so much unsupervised time with her? Why are you giving her this power over you?
Whatever your mother's problems are, and whatever was inflicted on your during your childhood, as an adult you have to stand firm and protect your children. Your mother doesn't need to like your husband. If he's materialistic and arrogant, that's up to you to deal with or leave behind. It's great that he's taken your son under his wing, but only if this is a positive situation and he's a good role model. Your son will learn to be a man and a husband and a father from this man.
But there's no way that you should allow manipulation of your son by your mother, and there is no way that your son should be put in an adult role of "reporting" to you what your mother said to him about you and other issues. If you are scared of her, get to the bottom of that - what it comes from, what power you think she has over you, and what power you have willingly handed over. If you need help, get counseling - ask your doctor, your children's pediatrician, or a local clergy/pastoral counseling center for referrals to someone who either charges a sliding scale or accepts your medical insurance.
There's an old saying: "No one can make you feel guilty or inferior without your permission." She cannot have an influence over your children unless you let her near them. And do not decide that your children need a grandmother above all else, even if she's toxic. Say no.
But I do have concerns about your profile info, and I have grave concerns about anyone who would put her child's real name on an internet forum. Please stop that immediately and edit your question to take the child's name out of it. That's totally unsafe and an indication that you need way more parenting classes and support than you have.