A person always reports income earned from working on a tax return in their own name, even if they are someone else's dependent.
If she did not earn enough money to have provided more than half her own support, then she is your dependent and must check the box that "I can be claimed as a dependent by someone else." If she is someone else's dependent, she can't claim a dependent of her own.
However, assuming she and the baby lived with you, you can claim both your daughter and granddaughter as your dependents. If they didn't live with you, we would need more information.
