As I consider this further, I don't think whether or not any of you were lying is the deciding factor in the interaction here. Who disrupted the ease of the conversation? The brother. OP added some to it, though in the moment, I think many of us would be flustered to be called a liar for saying something we were certain about. All the wife did was say "No, I'm not from there." I don't see any mention that she was confrontational or angry in her tone. There were plenty of polite ways to respond to that statement which would gloss over the moment, but no one took them.
Would it bug me that someone was lying about something like this for reasons I can't fathom (I mean seriously, what's up with that?) - absolutely. But if I called them out publicly about it - like the brother did - it would be me who was making everyone uncomfortable, not the liar. Its like when someone disagrees about a fact in conversation. I may know I'm right, I may know I can google it on my phone and prove I'm right, but I don't because it is more polite to just change the subject or move on.