i think seeings its a middle name and nor first name it would be ok for both boys to have James.

I used to have a bf who was Ben and his first cousin was Benjamin (but also Ben), i always wondered why his aunty would have named her son Ben after having already had a nephew Ben, but they lived in 2 diff states and guess she just loved the name!

But unless you actually like the name James for middle i wouldnt use it just cause someone else wants you to, both u and dh have the total say in names i think